Friend or foe?A special report on China’s place in the world December 4th 2010
ChinaCOV.indd 1 23/11/2010 15:55
The Economist December 4th 2010 A special report on China’s place in the world 1
China insists that its growing military and diplomatic clout pose nothreat. The rest of the world, and particularly America, is not so sure,says Edward Carr
years of colonial humiliation.Taken like that, the parable of Goujian
sums up what some people �nd alarmingabout China’s rise as a superpower today.Ever since Deng Xiaoping set about reforming the economy in 1978, China hastalked peace. Still militarily and economically too weak to challenge America, it hasconcentrated on getting richer. Even as China has grown in power and rebuilt itsarmed forces, the West and Japan have runup debts and sold it their technology. China has been patient, but the day when itcan once again start to impose its will isdrawing near.
However, Goujian’s story has anotherreading, too. Paul Cohen, a Harvard scholar who has written about the king, explains that the Chinese today see him as anexample of perseverance and dedication.Students are told that if they want to succeed they must be like King Goujian, sleeping on brushwood and tasting gall�thatgreat accomplishments come only withsacri�ce and unyielding purpose. ThisGoujian represents selfimprovement anddedication, not revenge.
Which Goujian will 21stcentury Chinafollow? Will it broadly �t in with the Western world, as a place where people wantnothing more than a chance to succeedand enjoy the rewards of their hard work?Or, as its wealth and power begin to overshadow all but the United States, will China become a threat�an angry country set
Brushwood and gall
IN 492BC, at the end of the �Spring andAutumn� period in Chinese history,
Goujian, the king of Yue in modern Zhejiang, was taken prisoner after a disastrouscampaign against King Fuchai, his neighbour to the north. Goujian was put to workin the royal stables where he bore his captivity with such dignity that he graduallywon Fuchai’s respect. After a few years Fuchai let him return home as his vassal.
Goujian never forgot his humiliation.He slept on brushwood and hung a gallbladder in his room, licking it daily to feedhis appetite for revenge. Yue appeared loyal, but its gifts of craftsmen and timbertempted Fuchai to build palaces and towers even though the extravagance ensnared him in debt. Goujian distracted himwith Yue’s most beautiful women, bribedhis o�cials and bought enough grain toempty his granaries. Meanwhile, as Fuchai’s kingdom declined, Yue grew richand raised a new army.
Goujian bided his time for eight longyears. By 482BC, con�dent of his superiority, he set o� north with almost 50,000warriors. Over several campaigns they putFuchai and his kingdom to the sword.
The king who slept on brushwood andtasted gall is as familiar to Chinese as KingAlfred and his cakes are to Britons, orGeorge Washington and the cherry tree areto Americans. In the early 20th century hebecame a symbol of resistance against thetreaty ports, foreign concessions and the
An audio interview with the author is at
Economist.com/audiovideo/specialreports
A list of sources is at
Economist.com/specialreports
The fourth modernisationChina is becoming a military force to reckonwith in the western Paci�c. How shouldAmerica respond? Page 4
Less biding and hidingChina is becoming more nationalistic andmore assertive. How will other countriesreact? Page 6
In the balanceTheir wealth depends on China, their security on America. Which way should Asiancountries face? Page 9
Friends, or elseLiving with China’s rise will test America’sdiplomacy as never before. Page 11
Strategic reassuranceMany things could worsen relations betweenChina and America. Here are ten ways tomake them better. Page 13
Also in this section
AcknowledgmentsMany people helped with this special report. The authorwould especially like to mention: Rob Ayson, Chen Zhimin,Jae Ho Chung, Malcolm Cook, Admiral William Fallon, KimFam, Andrew Ferrier, Charles Finny, Charles Freeman, PaulGebhard, Richard Grant, Andrew Krepinevich, MichaelL’Estrange, Ma Jiali, Jim McGinlay, Russell Moses,�Craggy� Ridge, Admiral Gary Roughead, DavidShambaugh, Robert Sutter, Hitoshi Tanaka, TomohikoTaniguchi, Jitsuro Terashima, William Tow, GeneralNoboru Yamaguchi and Zhu Feng.
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2 A special report on China’s place in the world The Economist December 4th 2010
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on avenging past wrongs and forcing others to bend to its will? China’s choice ofrole, says Jim Steinberg, America’s deputysecretary of state, is �the great question ofour time�. The peace and prosperity of theworld depends on which path it takes.
Some people argue that China is nowtoo enmeshed in globalisation to put theworld economy in jeopardy through waror coercion. Trade has brought prosperity.China buys raw materials and components from abroad and sells its wares inforeign markets. It holds $2.6 trillion of foreignexchange reserves. Why should it pulldown the system that has served it so well?
But that is too sanguine. In the past integration has sometimes gone before con�agration. Europe went up in �ames in 1914even though Germany was Britain’s secondlargest export market and Britain wasGermany’s largest. Japan got rich and fellin with the European powers before it brutally set about colonising Asia.
Others go to the opposite extreme, arguing that China and America are condemned to be enemies. Ever since Spartaled the Peloponnesian League against Athens, they say, declining powers have failedto give way fast enough to satisfy risingpowers. As China’s economic and militarystrength increase, so will its sense of entitlement and its ambition. In the end patience will run out, because America willnot willingly surrender leadership.
Reasons for optimismBut that is too bleak. China clings to its territorial claims�over Taiwan, the SouthChina Sea, various islands and with India.Yet, unlike the great powers before 1945,China is not looking for new colonies. Andunlike the Soviet Union, China does nothave an ideology to export. In fact, America’s liberal idealism is far more potent thantoken Communism, warmedup Confucianism or anything else that China has too�er. When two countries have nuclearweapons, a war may not be worth �ghting.
In the real world the dealings betweenrising and declining powers are notstraightforward. Twice Britain feared thatcontinental Europe would be dominatedby an expansionary Germany and twice itwent to war. Yet when America took worldleadership from Britain, the two remainedconstant allies. After the second world warJapan and Germany rose from the ashes tobecome the world’s second and thirdlargest economies, without a whisper of a political challenge to the United States.
Internationalrelations theorists havedevoted much thought to the passing of
empires. The insight of �powertransitiontheory� is that satis�ed powers, such aspostwar Germany and Japan, do not challenge the world order when they rise. Butdissatis�ed ones, such as prewar Germany and Japan, conclude that the systemshaped and maintained by the incumbentpowers is rigged against them. In the anarchic arena of geopolitics they believe thatthey will be denied what is rightfully theirsunless they enforce their claim.
So for most of the past decade the twogreat powers edged towards what DavidLampton, a professor at Johns HopkinsSchool of Advanced International Studies,calls a double wager. China would broadlyfall in with America’s postwar order, betting that the rest of the world, eager for China’s help and its markets, would allow it togrow richer and more powerful. Americawould not seek to prevent this rise, bettingthat prosperity would eventually turn China into one of the system’s supporters�a�responsible stakeholder� in the languageof Robert Zoellick, a deputy secretary ofstate under George Bush junior and nowpresident of the World Bank.
For much of the past decade, barringthe odd ti�, the wager worked. Before 2001China and America fell out over Taiwan,the American bombing of China’s embassy in Belgrade and a fatal midair collisionbetween an American EP3 spy plane and aChinese �ghter. Many commentators backthen thought that America and Chinawere on a dangerous course, but Chineseand American leaders did not pursue it.Since then America has been busy withthe war on terror and has sought plain
dealing with China. American companiesenjoyed decent access to Chinese markets.China lent the American government hugeamounts of money.
This suited China, which concludedlong ago that the best way to build its�comprehensive national power� wasthrough economic growth. According to itsanalysis, articulated in a series of white papers and speeches in the late 1990s and early 2000s, the country needed a �New Security Concept�. Growth demanded stability,which in turn required that China’s neighbours did not feel threatened.
To reassure them, China started to jointhe international organisations it had onceshunned. As well as earning it credentialsas a good citizen, this was also a safe way tocounter American in�uence. China led thesixparty talks designed to curb North Korea’s nuclear programme. The governmentsigned the Comprehensive TestBan Treatyand by and large stopped proliferatingweapons (though proliferation by rogueChinese companies continued). It sentpeople on UN peacekeeping operations,supplying more of them than any otherpermanent member of the security council or any NATO country.
Inevitably, there were still disputes anddi�erences. But diplomats, policymakersand academics allowed themselves to believe that, in the nuclear age, China mightjust emerge peacefully as a new superpower. However, that con�dence has recently softened. In the past few monthsChina has fallen out with Japan over a �shing boat that rammed at least one if nottwo Japanese coastguard vessels o� what
The Economist December 4th 2010 A special report on China’s place in the world 3
2 the Japanese call the Senkaku Islands andthe Chinese the Diaoyu Islands.
Earlier, China failed to back South Korea over the sinking of a Korean navy corvette with the loss of 46 crew�eventhough an international panel had concluded that the Cheonan was attacked by aNorth Korean submarine. When Americaand South Korea reacted to the sinking byplanning joint exercises in the Yellow Sea,China objected and got one of themmoved eastward, to the Sea of Japan. Andwhen North Korea shelled a South Koreanisland last month, China was characteristically reluctant to condemn it.
China has also begun to include territorial claims over large parts of the SouthChina Sea among its six �primary concerns��new language that has alarmeddiplomats. When members of the Association of SouthEast Asian Nations (ASEAN)complained about this in a meeting in Hanoi in the summer, China’s foreign minister, Yang Jiechi, worked himself into a rage:�All of you remember how much of youreconomic prosperity depends on us,� hereportedly spat back.
Last year a vicious editorial in China’sPeople’s Daily attacked India after its primeminister, Manmohan Singh, visited disputed territory near Tibet; Barack Obama wasshabbily treated, �rst on a visit to Beijingand later at the climatechange talks in Copenhagen, where a junior Chinese o�cialwagged his �nger at the leader of the freeworld; Chinese vessels have repeatedlyharassed American and Japanese navalships, including the USS John S. McCainand a survey vessel, the USNS Impeccable.
Such things are perhaps small in themselves, but they matter because of thatdouble bet. America is constantly looking
for signs that China is going to welsh on thedeal and turn aggressive�and China islooking for signs that America and its alliesare going to gang up to stop its rise. Everything is coloured by that strategic mistrust.
Peering through this lens, Chinawatchers detect a shift. �The smiling diplomacyis over,� says Richard Armitage, deputysecretary of state under George Bush. �China’s aspiration for power is very obvious,�says Yukio Okamoto, a Japanese securityexpert. Diplomats, talking on condition ofanonymity, speak of underlying suspicions and anxiety in their dealings withChina. Although daytoday tra�c between American and Chinese governmentdepartments �ows smoothly, �the strategicmistrust between China and the US continues to deepen,� says Bonnie Glaser ofthe Centre for Strategic and InternationalStudies in Washington, DC.
There is nothing inevitable about thisdeterioration. Peace still makes sense. China faces huge problems at home. It bene�tsfrom American markets and good relations with its neighbours, just as it did in2001. The Chinese Communist Party andthe occupant of the White House, of anypolitical stripe, have more to gain from economic growth than from anything else.
China’s leaders understand this. In November 2003 and February 2004 the Politburo held special sessions on the rise andfall of nations since the 15th century. American policymakers are no less aware that,though a powerful China will be hard tocope with, a dissatis�ed and powerful China would be impossible.
Now, however, many factors, on manysides, from domestic politics to the falloutfrom the �nancial crisis, are conspiring tomake relations worse. The risk is not war�
for the time being that remains almost unthinkable, if only because it would be sogreatly to everyone’s disadvantage. Thedanger is that the leaders of China andAmerica will over the next decade lay thefoundations for a deep antagonism. This isbest described by Henry Kissinger.
The dark sideUnder Richard Nixon, Mr Kissinger createdthe conditions for 40 years of peace in Asiaby seeing that America and China couldgain more from working together thanfrom competing. Today Mr Kissinger isworried. Speaking in September at a meeting of the International Institute for Strategic Studies, he observed that bringing China into the global order would be evenharder than bringing in Germany hadbeen a century ago.
�It is not an issue of integrating a Europeanstyle nationstate, but a full�edgedcontinental power,� he said. �The DNA ofboth [America and China] could generate agrowing adversarial relationship, much asGermany and Britain drifted from friendship to confrontationðNeither Washington nor Beijing has much practice in cooperative relations with equals. Yet theirleaders have no more important task thanto implement the truths that neither country will ever be able to dominate the other,and that con�ict between them would exhaust their societies and undermine theprospects of world peace.�
Nowhere is the incipient rivalry sharper than between America’s armed forcesand their rapidly modernising Chinesecounterparts. Globally, American arms remain vastly superior. But in China’s coastalwaters they would no longer confer suchan easy victory. 7
4 A special report on China’s place in the world The Economist December 4th 2010
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THIRTYFIVE years ago Deng Xiaopingaccused the People’s Liberation Army
(PLA) of �bloating, laxity, conceit, extravagance and inertia�. Even so, three years later, when he set about modernising China,he put the PLA last in the queue, behindfarming, industry and science. And whenthe commander of the navy in 1982 laid outhis plans for China to become a world seapower, he did not expect his goal to be realised before 2040.
Later military modernisation becamemore of a priority, thanks to two demonstrations of American �repower. First,America’s use of precision weapons in Operation Desert Storm during the �rst Gulfwar convinced China that it could no longer base its defence on the weight of numbers. Second, when the PLA was hectoringTaiwan with missile tests in 1996, PresidentBill Clinton ordered two aircraftcarrierstrike groups into the region, one of themheaded by the provocatively named USS
Independence. China had to back down.The collapse of the Soviet Union had
persuaded China’s leaders that an armsrace with the world’s only superpowercould squander enough money to pose athreat to the party’s grip. To challengeAmerica head on made no sense. InsteadChina put its e�orts into a�ordable �asymmetric� weapons.
This unorthodox strategy has made thePLA’s progress harder to measure. Westernopinion is deeply divided. Military analysts are alarmed at what they see as agrowing threat to American maritime supremacy in the western Paci�c. China security specialists tend to sco� at all thescaremongering. Who is right?
Three areas of the PLA’s modernisationstand out. First, China has created what thePentagon calls �the most active landbasedballistic and cruisemissile programme inthe world�. The Second Artillery has about1,100 shortrange ballistic missiles facingTaiwan and has been extending their rangeand improving their accuracy and payload. The Second Artillery is also improving its mediumrange ballistic missiles,able to carry either conventional or nuclear warheads. The PLA has deployed several hundred air and landlaunched longrange cruise missiles. And it is developing
the world’s �rst antiship ballistic missile,�tted with a manoeuvrable reentry vehicle for added menace.
Second, China has transformed and enlarged its submarine �eet, which can nowberth in the newly completed base on Hainan Island, just o� China’s southern coast.In the eight years to 2002 China bought 12Russian Kiloclass submarines, a big improvement on its own noisy Ming and Romeoclass boats. Since then the PLA navyhas been introducing longerrange andstealthier Chinese designs, including thenuclearpowered Jin class, which carriesballistic missiles, and the Shang class, a nuclearpowered attack submarine. Chinahas about 66 submarines against America’s 71, though the American boats are superior. By 2030, according to the KokodaFoundation, an Australian thinktank, China could have 85100 submarines.
And third, China has concentrated onwhat it calls �informatisation�, a tonguetwister that Jiang Zemin coined in 2002 todescribe how the PLA needs to function asone force, using sensors, communicationsand electronic and cyberwarfare. Chinanow has a good idea of what is going on farinto the Paci�c, thanks to a combination ofsatellites, overthehorizon radar, mediumrange surfacewave radars, reconnaissance
drones and underwatersensor arrays.China has also been working on anti
satellite weapons. American satelliteshave been �dazzled� by lasers �red fromthe ground. And in 2007 a ballistic missilelaunched from Xichang space centre in Sichuan blew up a broken weather satellite�no mean feat, though other countrieswere furious because it produced morethan 35,000 new pieces of space debris.
Chinese hackers have been busy, too. InMarch last year Canadian researchers discovered a spy network containing morethan 1,300 computers, many of them inChina, that had got into governments’ systems. Taiwanese and Western targets suffered from severe Chinese cyberattacks atleast 35 times in the decade to 2009, according to Northrop Grumman, an Americandefence contractor. The Pentagon concedes that it is not sure the PLA was behindsuch attacks, but argues that �authoritative� analysts in the PLA see cyberwarfareas important.
The new arsenalWhat does this amount to? Military experts in America, Australia and Japanthink China’s new arsenals are a greaterthreat than its higherpro�le plans tolaunch aircraftcarriers in the next decade
The fourth modernisation
China is becoming a military force to reckon with in the western Paci�c. How should America respond?
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or so. Alan Dupont, of the University ofSydney in Australia, says that �missilesand cyberequivalents are becoming theweapons of choice for the conventionallyoutgunned.�
According to the Centre for Strategicand Budgetary Assessments (CsBA), anAmerican research institute, Chinese �repower threatens America’s Asian bases,which until now have been safe from allbut nuclear attack. The Second Artillery’smissiles could swamp the bases’ defencesand destroy runways as well as large numbers of �ghters and ships. Japan is alreadywithin range of Chinese missiles, many ofthem currently pointing at Taiwan. Guamsoon will be (see chart 1, previous page).
China’s submarines, missiles and antiship cruise missiles threaten America’s aircraftcarrier strike groups within 1,000 to1,600 nautical miles of the Chinese coast.According to Ross Babbage, an Australiandefence analyst and founder of the Kokoda Foundation, if China had an antiship ballistic missile, coming in fast andwithout much warning, it would be evenharder to defend against. And China’sspace and cyberweapons could serve aswhat Chinese planners label an �assassin’s mace� in a surprise attack designed tosmash America’s elaborate but fragile electronic networks. That would leave American forces halfblind and mute, and itsbases and carriers more vulnerable still.
In sum, China’s abilities to strike havesoared far beyond seeking to deter American intervention in any future mainlanddispute with Taiwan. Today China can project power out from its coastline well beyond the 12mile (19km) limit that theAmericans once approached without asecond thought. Mr Okamoto, the Japanese security expert, believes China’s strategy is to have �complete control� of whatplanners call the First Island Chain. Ultimately, China seems to want to stop theAmerican �eet from being able to secure itsinterests in the western Paci�c.
America’s most senior o�cials havetaken note. Last year Robert Gates, the defence secretary, gave warning that �investments [of countries like China] in cyberand antisatellite warfare, antiair and antiship weaponry and ballistic missiles couldthreaten America’s primary way to projectpower and help allies in the Paci�c�in particular our forward air bases and carrierstrike groups.�
Mr Babbage is blunter: �Current defence planning is invalid,� he says. He andthe analysts at CSBA argue that Americaneeds to rethink its strategy in the Paci�c. It
should strengthen its bases and be able todisrupt Chinese attacks with decoys andby spreading aircraft and ships around theregion. American forces must have betterlogistics and be able to �ght even whentheir information networks are impaired.Crucially, they must be in a position to disable China’s electronic reconnaissance,surveillance and battledamage assessment, some of which is protected by a system of tunnels beyond easy reach ofAmerican weapons.
Paci�c in name onlyCritics say the cold warriors are su�eringfrom a bad case of �enemydeprivationsyndrome�. For a start, the impression thatChina’s defence spending has soared ismisleading. The PLA’s budget has broadlykept pace with GDP in the past decade,after two decades in which its share ofGDP fell (see chart 2). Experts di�er aboutthe size of China’s defence budget, whichis only partly disclosed. Sam PerloFreeman, of the Stockholm International PeaceResearch Institute, puts overall spending in2009 at $99 billion in 2008 dollars, thoughsome estimates are higher and the o�cialtotal is only $70 billion. The United Statesis planning to spend $663 billion. As ashare of GDP, China spends less than halfthe American �gure and less than it did atthe start of the 1990s. �There is not muchevidence of an arms race,� says Mr PerloFreeman.
Some doubt the quality of China’sequipment. One retired American admiralsays that much of the Russian equipment itbought was �junk�. Despite China’s progress, it lags in guidance and control, turbine engines, machine tools, diagnosticand forensic equipment and computeraided design and manufacturing. �Chinahas come a long way fast,� says ProfessorDupont, �but military modernisation gets
harder from here.�Some have doubts about China’s man
power, too. The PLA is much more professional now than when it was a peasantarmy, but it lacks experience. Nigel Inkster,of the International Institute for StrategicStudies (IISS), recalls one of the foundersof the Chinese navy once telling him: �It’snot that I didn’t know much about sailing,but I hadn’t ever seen the sea.�
Complex subjects like submarine warfare take years to master. �If you �ght, thereare holes,� says the IISS’s Christian LeMière. �And until you do, you don’t knowwhere they are.� The retired admiral thinksChinese forces su�er from a lack of trust,which could slow them up in battle. �Wegive our people responsibility and initiative,� he says. �That’s anathema to them.�
Robert Ross, a professor at Harvard, argues that the pessimists overestimate China’s threat and underestimate America’spowers. The United States is better able totrack the other side’s submarines; it is superior in cyberwarfare and less vulnerable than China in space�if only becauseit has builtin redundancy. China wouldstruggle to penetrate the countermeasuresand electronic camou�age that protectAmerican ships. Carlyle Thayer, of theAustralian Defence Force Academy, notesthat it has already deployed 31of its 53 fastattack submarines and three Ohio classnuclear submarines to the Paci�c.
For all the uncertainties in this debate,three things are beyond dispute. First, China has already forced American ships tothink about how and when they approachthe Chinese coast. The closer Americanvessels come, the more missiles and submarines they face and the less time theywould have to react to a strike. Anyonesailing a carrier worth $15 billion20 billionwith a crew of 6,000 would think twiceabout taking on that extra risk. To deny
2A question of perspective
Source: SIPRI *Estimates
Military spending
0
100
200
300
400
500
600
1990 95 2000 05 09
China*
Japan
United States
Total spending, 2009, $bn
0
2
4
6
1
3
5
1990 95 2000 05 08
Japan
China*
United States
% of GDP2008 $, 1990=100
99
663
47
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America possession of seas it has dominated for decades, China does not need tocontrol its own coastal waters; it just has tobe able to threaten American ships there.Hugh White, a former Australian securityand defence o�cial, foresees the westernPaci�c becoming a �naval nogo zone�.
Second, China’s ability to project power is improving. Its submarines, missiles,and cyber and electronic warfare, oncepoor, now pose a threat. Its J10 would be amatch for Israel’s fast jet. China’s weaponswill continue to improve, and its forceswill gather experience. Provided that theeconomy does not fall over, budgets willgrow, too, absolutely and possibly as ashare of GDP. Other things being equal,China can project power into its backyardmore easily than America can project power across the ocean. At risk is what MrGates has called �the operational sanctuary our navy has enjoyed in the westernPaci�c for the better part of six decades�.
Third, although the United States is ableto respond to China, it will have to overcome some obstacles �rst. America’s mili
tary spending in Asia is overshadowed bythe need to cut overall government spending and by other military priorities, such asAfghanistan. Jonathan Pollack, of theBrookings Institution, points out that someideas, such as replacing aircraftcarrierswith more submarines, would inevitablyrun into opposition from the navy andfrom politicians whose constituencieswould su�er. �For many o�cers the navy’score institutional identity is indelibly tiedto carriers and the powerprojection mission they perform,� he says. �Reducingtheir numbers is going to be a very painfulprocess.� Above all, big shifts in militaryplanning take decades: America needs tothink now about China in 2025.
All this points to an important principle. Military planning is framed di�erentlyfrom diplomacy. Diplomats are interestedin what they think states intend to do, butmilitary planners have to work with whatthey think states can do. Intentions changeand states can mislead. If you are chargedwith defending your country, you need tobe able to meet even improbable threats.
That logic works in China, too. Americahas not been shy of going to war in recentyears. Not long ago a retired Chinese admiral likened the American navy to a manwith a criminal record �wandering justoutside the gate of a family home�. American strength in the 1990s made China feelinsecure, so it transformed the PLA to shoreup its policy on Taiwan and protect its economically vital coastline. Yet by adding toits own security, China has taken awayfrom that of its neighbours and of the United States. Perhaps China does not meanever to use its weapons aggressively. ButAmerican defence planners cannot rely onthat, so they must respond.
In this way two states that never intendharm can begin to perceive each other asgrowing threats. If you do not arm, youleave yourself open to attack. If you do,you threaten the other country. A Britishhistorian, Herbert Butter�eld, called thisthe �absolute predicament and irreducibledilemma�. It is one reason why relationsbetween China and America will probably sour. 7
�WHO is your enemy?� It was a �neBeijing day in early summer this
year. In the seminar room on the campusof Peking University one of a delegation ofvisiting American academics posed thequestion to Wang Jisi, dean of the Schoolof International Studies. There was a moment’s silence. Mr Wang hesitated beforelooking up and replying: �Most Chinesewould say the US is the enemy.�
And yet, as Robert Ross sets out in hisbook, �Chinese Security Policy�, Americaand China have had a remarkably productive partnership since President RichardNixon and Henry Kissinger turned up inBeijing in 1972. At �rst this was based on ashared antagonism towards the Soviet Union, which China had fought in borderclashes in 1969. Under Mao, China had often bullied its neighbours, but had nowsubordinated this part of its foreign policybecause cooperation with America wasmore important. Under Deng Xiaoping,Mao’s eventual successor, China even reluctantly accepted America’s continuingarms sales to Taiwan.
When the Soviet threat evaporated,
China continued to put foreign policy second�this time for the sake of economic development. Again, that required cooperation with America, the best source ofdemand, technology and investment.Deng summed up the policy in a famousslogan: �Coolly observe, calmly deal withthings, hold your position, hide your capacities, bide your time, accomplish thingswhere possible.� When the world began toworry about China’s surging power, a senior o�cial tried to calm fears, pledging aheping jueqi (peaceful rise). Even that hadto be watered down, as the jue in �rise� suggests �towering as a peak�. These days HuJintao, China’s leader, prefers the deliberately bland �harmonious world�.
Over the years China’s leaders haveworked hard to steer relations with America through their inevitable crises. By andlarge, they have succeeded. Now China’sbehaviour�most recently towards Japan,South Korea and the South China Sea�hasbegun to alarm Chinawatchers. Yet whywould the country’s leaders suddenly riskundermining a policy that has broughtChina such prosperity?
There are two possible reasons. One isthat China’s strategy has begun to change.Some Chinese argue that, now their country is strong, it no longer needs to kowtowto American power. The other is that Chinese society itself has begun to change. Inwhat Richard Rigby, of the Australian National University in Canberra, calls �a fragmented authoritarian oneparty state�, theleaders need to listen more closely to whatother people think.
If we can, we willStart with China’s changing strategy. China has a keen sense of its growing nationalpower and American decline, sharpenedby the �nancial crisis, which uncovered�aws in America and Europe and foundChina to be stronger than many had expected. �There is a perception in China thatthe West needs China more than Chinaneeds the West,� says one diplomat in Beijing. America’s di�cult wars have added tothe impression. According to Ra�aello Pantucci, a visiting scholar at the ShanghaiAcademy of Social Sciences, Chinese analysts �gleefully� conclude that NATO
Less biding and hiding
China is becoming more nationalistic and more assertive. How will other countries react?
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forces will lose in Afghanistan.�We used to hide our power�deny our
power,� a Chinese scholar told DavidLampton of the School of Advanced International Studies in Washington. �But thenthis became increasingly impossible as ourstrength increased.� For a time this led toredoubled e�orts to reassure America andthe region. But today, according to YuanPeng, of the China Institutes of Contemporary International Relations in Beijing,�many Chinese scholars suggest that thegovernment give up the illusion of US partnership and face squarely the profoundand inevitable strategic competition.�
China’s desire to assert itself springsfrom a natural appetite. A rising country islike a diner sitting down to a full table: untilhe starts eating, he does not realise howhungry he is. �Power changes nations,�writes Robert Kagan, an American foreignpolicy commentator. �It expands theirwants and desires, increases their sense ofentitlement, their need for deference andrespect. It also makes them more ambitious. It lessens their tolerance to obstacles,their willingness to take no for an answer.�
China has been good at suppressingthat appetite, but it also has growing reasons to project power. Chinese companiesare scouring the globe for the raw materials they need. Already China is Saudi Arabia’s biggest customer. It imports abouthalf of the oil it burns, a share that will riseto twothirds by 2015 and four�fths by2030. China cares what happens in thecountries that supply it.
An irony not lost on Kurt Campbell,America’s assistant secretary of state, isthat China’s strategy of acquiring naturalresources has so far been based on what hecalls �an operating system� provided bythe United States�which guarantees stability and the free �ow of maritime tra�c.One reason why China is now building anoceangoing navy is to protect its raw materials and goods from embargoes.
This re�ects a lack of faith in the globaltrading system, part of an underlying fearthat the West is fundamentally hostile toChina’s prosperity��Westernising, dividing and weakening�, as the slogan goes.Jonathan Paris, a Londonbased securityspecialist, says young Chinese are disenchanted by what they see as Western Chinabashing. Some in�uential groups thinkthat foreign calls for China to be a �responsible stakeholder� are in fact designed tokeep the country down, and that it shouldcooperate only if the West makes concessions on issues such as Taiwan and Tibet.
The question is whether China’s lead
ers agree that now is the time to assert thecountry’s power. The apex of Chinese politics is so closed to the world that analystscannot be sure. In 2009 Mr Hu said Chinacould �actively� make modest contributions to international issues. On their annual summer retreat, at the resort of Beidaihe, the country’s leaders reportedlydebated whether China should edge awayfrom Deng’s �bide and hide� slogan. Somein�uential party journals that may re�ectthe leaders’ thinking have concluded, �notyet�. However, even that position strikes
some diplomats as a shift. In the 1990s theargument was about whether China couldwork with America in the long run. Now itis about when to apply pressure.
Whatever the leaders think, they areoperating in a society that is changing rapidly. These days they are more in�uencedby a new set of foreignpolicy interests, including resource companies, �nancial institutions, local government, research organisations, the press and online activists.Linda Jakobson and Dean Knox of theStockholm International Peace ResearchInstitute (SIPRI), who have studied thesegroups, say many of them feel strongly
that China should be �less submissive� towards the outside world.
Such people’s assertiveness partly re�ects the patriotism that the governmentencouraged in order to prop up its legitimacy after it brutally put down the protests inTiananmen Square in 1989. First came aweekly �agraising ceremony with a rousing address in every school. Next, museums and relics were designated �patrioticeducation bases�. In 1991 Jiang Zemin, thengeneral secretary, wrote that patriotic education �let the Chinese people, especiallythe youth, enhance their pride and selfcon�dence in the nation and prevent therise of the worship of the West�.
The rise of nationalismThe �rst generation to get that treatment isnow nearing its 30s, and its nationalismshows every sign of being genuine andwidespread. �On Tibet and Taiwan it’s notjust Chinese ministers who bang tables,�says Lord Patten, who negotiated the handover of Hong Kong from Britain to China,�but Chinese dissidents, too.� �This is apeople with a sense of their past greatness,recent humiliation, present achievementand future supremacy,� says Mr White, theformer Australian security and defence of�cial. �It’s a potent mix.�
China’s more commercial media havefound that nationalism sells. According toSusan Shirk, an American academic andformer deputy assistant secretary of state,readers like stories complaining about Japan, Taiwan and America�and the censors are usually happy to see coverage ofsuch things. SIPRI found that the most in�uential journalism on foreign policy appears in the Global Times, which is writtenby hardline nationalists.
The country’s excitable �netizens� tendto spread the idea that China is misunderstood and to see a slight round every corner. In 2008, during a Chinese row withVietnam over the South China Sea, another suggested teaching the Vietnamese a lesson�and published an invasion plan toshow how. This feeds China’s sense of victimhood. One blogger and journalist,called Fang Kechang, worked out that since1948 the Chinese people had o�ciallybeen �humiliated� at least 140 times�andthat the insults were more common in thereform era than in Mao’s time.
What passes for public opinion in China is not the only source of pressure on theleaders. The factions within China’s elite�selectorate�, no passive monolith, havealso been �nding their voice. And that, too,tends to nudge policy towards national
8 A special report on China’s place in the world The Economist December 4th 2010
2 ism. Foreign a�airs used to be the businessof the prodetente foreign ministry. It wasmocked as the �ministry for selling out thecountry� and, supposedly, was sent calcium pills by members of the public whowanted to sti�en its spine.
Now the issues are more complex, domestic ministries and midlevel bureaucrats are also involved�and they tend to bemore nationalistic than senior foreignministry o�cials. The SIPRI researchersfound that the ministry of state security, inparticular, has a bigger role in foreign policy. At the climatechange talks in Copenhagen authority lay with the National Development and Reform Commission, chargedwith economic development. China attracted foreign criticism for taking a hardline, against the foreign ministry’s advice.
The PLA’s in�uence is harder to read.On the one hand since the 1992 party congress no o�cer has been picked for the allimportant standing committee of the Politburo. At the end of the Cultural Revolutionmore than half the Politburo was from thePLA; now only two out of 24 are. On theother, writers from PLA research institutions are more outspoken and conspicuous than they used to be, using newspapercommentaries and television appearancesto put over the PLA’s views.
Unlike professional Western armies,the PLA speaks out on foreign policy. In hisbook �The Party�, Richard McGregorpoints out that it contains roughly 90,000party cells�one for every 25 soldiers. Although promotion these days depends oncompetence as well as ideology, the PLA’spolitical role gives it a voice in securitypolicy. Unlike Mao and Deng, today’s leaders did not have a military background, sothey may need to hold the PLA close.
There is no reason to believe that theleaders’ authority has dimmed. If theythink a policy is of paramount importancefor the country or the party, they will gettheir way. The authorities can still putdown pretty much any demonstration ifthey choose. But politics is rarely black andwhite, even in China. Government is usually about shades of grey. When the leaders hear a single message from the press,netizens and their own advisers, they mayfeel they need to listen. When public opinion is split, they can usually a�ord to ignore it. James Reilly, of the University ofSydney, who has studied China’s policy towards Japan, says that public pressure ismost potent when the elite is divided.
Either way, the authorities will watchpublic opinion, if only because protest canbecome a covert form of opposition. Anti
Japanese demonstrations in South Koreain the 1960s fuelled the prodemocracymovement�just as protests against African students preceded the Tiananmenprotests in 1989. Foreign policy has a history of destabilising governments in China, says Rana Mitter of Oxford University,and the Chinese are quick to blame foreignfailures on domestic weakness��disorderat home, calamity abroad,� they like to say.
Nationalism may frame an issue beforethe leaders get to deal with it. By the timethe row over, say, the disputed Senkaku/Diaoyu Islands reaches their desks, thepropaganda department, along with commentators in the press and statementsfrom the PLA, may have created a contextthat they cannot back away from withoutlooking weak.
This dynamic is not new. It greatly complicated the midair collision between aChinese �ghter and an American spyplane in 2001, which the PLA had (wrongly) blamed on the Americans. But just now,in the runup to the change of the country’sleadership in 2012, seeming to be a pushover could wreck careers.
The risk, writes Ms Shirk, is that �compromise is likely to be viewed as capitulation.� That creates dangers for anyone inChina who favours detente. Speaking toMr Lampton about Taiwan, one Chinesescholar put it this way: �If we suppose thatthere are two options and they use toughmeasuresðand the leader fails to resolve[a problem], he is justi�ed. But if [he] usestoo much honey and he fails, he is regardedas guilty by all future generations.�
In the long term the leaders’ scope foraction will depend on China’s economicgrowth. A booming China will indicatethat the country is strong enough to pressits case in the world. A weak China wheregrowth has stumbled and the party feelsunder pressure at home could stir up trouble abroad. That does not leave muchscope for a less assertive China.
Supposing that the leaders want tocleave to Deng’s original injunction to
�bide and hide�, three things are in their favour. First, popular nationalism counts formost in territorial disputes, such as Taiwanand the islands o� China’s coast. According to Jian Yang, of Auckland University,New Zealand, nationalism plays less of apart in technical areas such as economics,which may matter as much, if not more, toChina’s leaders. Second, China does notobviously have a grand alternative visionto the liberal order that America has sponsored since the second world war. It neednot run into ideological battles abroad.
But third and most important, there is alot that America and China agree on. Bothwant a healthy world economy, a stableAsia, peace in the Middle East, open sealanes, a limit to proliferation, an open trading system, and so on. They have plenty ofreason to want good enough relations toaccomplish such things.
Turn up the assertivenessThe most likely outcome is a more assertive China that wants to get more doneabroad without fundamentally upsettingthe world order. On sensitive territorial issues where the party’s credentials are atstake, China may be uncompromising andincreasingly unreasonable. Elsewhere itsleaders will probably be looking for deals�though they will insist on better terms, asbe�ts a global power.
How easily will the world accommodate this more assertive China? For thebest part of a decade China has tried hardto reassure its neighbours that they havenothing to fear from its rise. So its new assertiveness will be doubly uncomfortable,especially if it is mixed up with badtempered territorial disputes. In other words,Asian security will be determined not justby how China uses its new strength but byhow other countries react to it. This wasthe idea behind China’s conciliatory NewSecurity Concept. Other countries will relax if they are reassured that China doesnot pose a threat. Unfortunately, the charmo�ensive has not altogether worked. 7
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IN HIS book �The Rivals�, Bill Emmott, aformer editor of this newspaper, quotes
a senior Indian foreignservice o�cial onthe subject of India and China. �The thingyou have to understand�, he says, �is thatboth of us think that the future belongs tous. We can’t both be right.�
When economists and businesspeoplelook at China’s rise, they see a blessing inwhich everyone stands to gain from everyone else’s prosperity. The country has become the chief trading partner for mostparts of the region�even if the West is animportant source of �nal demand. As China becomes richer, it will become a marketfor the rest of Asia, just as the region willbecome a bigger market for China.
Alas, security does not work that way.When two countries do not really trusteach other, greater security for one undermines the security of the other, as that Indian o�cial revealed. In a troubled continent like Asia, countries therefore look toAmerica to save them from an increasinglypowerful China�to �the water far away�for protection from �the �re nearby�.
Naturally, Asian countries want to haveit both ways: to resist China’s power but tocontinue trading with it; to bene�t fromAmerican security but without sacri�cingChinese commerce. This is a di�cult trickto pull o�, and if relations between America and China become harder to manageover the next decade or so, as looks likely,the region will sit uncomfortably betweentwo poles. The lesser powers could evenadd to the tension between the two giants.
That would frustrate China, which hasbeen at pains in recent years to reassure itsneighbours by doing the right thing, aswell as by softsoaping them with all thetalk about a �peaceful rise�. It has, for instance, gone out of its way to settle its border disputes�and on notably generousterms. Taylor Fravel, of the MassachusettsInstitute of Technology, concluded that insettling 17 of its 23 territorial disputes Chinausually agreed to take less than half of thecontested land. It has also usually beengenerous in economic diplomacy, signinga series of freetrade agreements acrossAsia. �In the space of a decade�, accordingto Marc Lanteigne, of Victoria Universityin Wellington, New Zealand, �China has
transformed itself from a sceptic of liberalised and preferential trade into one of theirstrongest proponents.�
China has joined multinational groupings (even, in the Shanghai CooperationOrganisation, helping to found one). It isnow a member of more than 50 intergovernmental and over 1,000 internationalnongovernmental out�ts. You can �ndChinese delegates at the ASEAN RegionalForum, ASEAN Plus Three, the ASEAN Defence Ministers’ Meeting and APEC�andthat is only the meetings starting with A.Asian states hope that, like Gulliver, Chinacan be bound by these regional threads.
That is to put a lot of faith in multinational forums, however. Criticising diplomats for trying to talk peace might seemharsh, but Asia has too many regional assemblies. The Japan Centre for International Exchange counted 277 multilateralintergovernmental meetings about security in 2007 alone.
Nick Bisley, of La Trobe University inAustralia, who has studied Asia’s regionalsecurity groups, concludes that this seeming abundance is really a mask for mistrust, as each Asian country tries to shop inits own favoured forum. Meetings can besuper�cial and leaders tend to shy away
from taking real, binding decisions. Beingin the media spotlight does not help. Asia’svarious forums and treaties �looks morelike a list of cats and dogs than a coherentand predictable framework for the future�,writes Gary Schmitt of the American Enterprise Institute in Washington.
Part of the trouble is that these forumshave to purge a lot of bad blood. AlthoughChina gets on better with its 14 neighboursnow than it has done for centuries, it stillfully trusts none of them�and vice versa.Relations with Japan have never got overthe imperial occupation. Since 1949 Chinahas skirmished with Russia and fought theUN in Korea and India and Vietnam.
Naval battlesIn addition China has pressed its seaclaims with a vehemence that it has mostly avoided in landborder disputes, perhaps because �sh and mineral riches are atstake. In the past 36 years China has skirmished over the Paracel Islands with Vietnam (1974); over the Spratly Islands withVietnam (1988) and the Philippines (1994);with South Korea over Socotra Rock(2006); and with Japan over the OkinotoriIslands (2004) and the Senkaku/Diaoyu Islands (most recently, 2010).
With so many neighbours pulling in somany di�erent directions, Beijing’s foreignpolicy faces inevitable contradictions.When North Korea sank the Cheonan, China had to choose between security and itsincreasingly close ties to South Korea. Insiding with the North, it sent a damagingsignal to the South that it was unwilling orunable to control its ally. Likewise, Chineserelations with India are complicated bywhat happens in neighbouring countries.Not only does India mistrust China in Pakistan, but it vies with it in places such as Nepal and Sri Lanka that it sees as within itsown sphere of in�uence.
How, then, do Asian countries copewith China’s strength and the shortcomings of multinational organisations? Theyare slowly but steadily buying weapons asthey get richer. In its defence white paperlast year Australia worried aloud about apowerful China and suggested renewingand doubling its submarine �eet as well asdesigning a more capable �future frigate�.
In the balance
Their wealth depends on China, their security on America. Which way should Asian countries face?
10 A special report on China’s place in the world The Economist December 4th 2010
2 Vietnam has ordered six Kiloclass submarines from Russia. Earlier, Singaporebought two Swedish Archerclass submarines and Malaysia and India betweenthem bought eight French Scorpèneclasssubmarines.
Japan, too, has been arming itself in aroundabout way. Although its o�cial defence budget is only 1% of its GDP and overthe past decade has shrunk by about 5% innominal terms, in real terms it has remained almost static. Japan has also beenshifting resources towards its navy, whichis still more than a match for China’s. AndRichard Samuels, of the Massachusetts Institute of Technology, has shown that theJapanese coastguard, �nanced outside thedefence budget, now has a �eet of shipsand rules of engagement that are laxer
than those of the selfdefence forces. As well as arming themselves, Asian
countries have drawn closer to the UnitedStates. This was on dramatic display at theASEAN regional forum in Hanoi in July. Ina piece of choreography that infuriatedChina, ASEAN members complained oneafter the other about the heavyhandedway their neighbour was asserting a claimover the South China Sea. The statementsculminated with Hillary Clinton, America’s secretary of state, underlining how hercountry would intercede to ensure safepassage through international waters.
Progress has been made bilaterally, too.In August Vietnam and America beganhighlevel military cooperation, with ameeting in Hanoi. Vietnamese o�cialshave been aboard the aircraftcarrier USS
George Washington o� the Vietnamesecoast. American naval ships have dockedin Vietnam, which has agreed to repairAmerican Sealift Command vessels. Itseems longer than 35 years ago that thetwo countries were at war.
Soso about Uncle SamYet there is nothing straightforward aboutlooking for security to America�Asia’sleast distrusted power, as Lee Kuan Yew,Singapore’s �Minister Mentor�, has described it. Sometimes countries have toovercome obstacles at home. DuringGeorge Bush’s presidency, India andAmerica cemented their new entente witha deal to work together in nuclear power.Yet even that degree of intimacy stirred updomestic opposition from leftwing Indi
ans. A fully �edged defence agreementwith America to contain China does notseem on the cards for now. India wouldnot relish a junior role and it prides itselfon its nonalignment.
Nor would it wish completely to castout China�a rival, yes, but also an ally onsuch things as climate change and globaleconomic issues. Besides, as Rahul RoyChaudhury of the IISS points out, Indianpoliticians are disconnected from thearmed forces. Without an e�ective national security council in which to make itscase, the navy has only slowly been able toconvince the government that China maybecome a threat.
The Indian services can mount impressive operations, but in a new book on thecountry’s military modernisation Stephen
Cohen and Sunil Dasgupta argue that theyalso su�er from interservice rivalry, poorprocurement and a lingering suspicion ofthe use of armed force (which from independence was associated with British colonial rule).
Or take South Korea, a longterm American ally, which has veered from securityto economics and back again. Under President Roh Moohyun the country peeled o�from America in an attempt to demonstrate its independence as an Asian powerwith increasingly close economic links toChina. In 2007 Roh won America’s agreement that from 2012 South Korea wouldonce again have command of its ownforces in the event of a war. He also supplied the North when America cut o� energy aid. However, his successor, Lee Myungbak, has wrenched policy towardsAmerican security once more. He has delayed the transfer of wartime command to2015 and taken a hard line on North Korea.
In Japan di�erent factions exhibit allthese tendencies and more. Parts of the governing Democratic Party of Japan havesought to move Japan closer to China. Partsof the Liberal Democratic Party, now in opposition after decades in government, resent the presence of 36,000 American military personnel in bases dotted across thecountry. Others are so wedded to paci�smthat the Americans wonder if the Japanesewould actually turn up if they were needed. And yet others harbour doubts whether Japan can always count on America. Tomany Japanese, the row over the Senkaku/Diaoyu Islands has shown how pricklyChina can be. After the coastguard arrestedthe �shermen, China cancelled meetings,gummed up Japanese trade and stoppedexports of rare earths. Japanese diplomatswere pleased that Mrs Clinton spoke out intheir support. Yet MIT’s Mr Samuels thinksAmerica needs to reassure Japan, its mostvital ally in Asia. If Japan appeared todoubt it, America would see all of its Asianalliances su�er.
The calculation for China is di�erent. Itse�orts to cultivate its neighbours have produced only mixed results. Economic tiesbuy a certain amount of goodwill, butmuch of the region rushes o� to Americaat the �rst sign of trouble. As China’s appetite to assert itself grows, that could easilybecome a source of dissatisfaction, whichwould feed the superpowers’ mutual mistrust. Either way, America and China arelikely to compete to win the loyalty of theregion. That, too, could poison the mostimportant relationship of all�the one between China and America. 7
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IN A recent essay Hugh White, a formerAustralian security and defence o�cial,
describes the following exchange with hisAmerican counterparts: �I put this catechism to them: ‘Do you think Americashould treat China as an equal if its powergrows equal to America’s?’ The answer isalways no. Then I ask, ‘Do you think Chinawill settle for anything less than beingtreated as equal?’ The answer to that is always no, too. Then I ask, ‘So how do youexpect the US and China to get along?’ Iusually get a shrug by way of reply.�
That shrug is a measure of America’sdi�culty in designing a China policy.America wants China to be a thriving market for its goods. It also wants China to become an active, responsible power inworld a�airs. Yet at the same time it feelsthreatened by China’s growing economic,industrial, diplomatic and military might.When America dislikes a position Chinahas taken, it cries foul. This mix of partnership and rivalry is a recipe for confusion.
One way to resolve these tensionswould be to put security �rst. Americacould aim to block China now before it getsany stronger. America won the cold war byisolating the Soviet economy and stalemating its armed forces. But trying thatagain would be a bad idea, as Robert Artexplains in a recent issue of Political ScienceQuarterly. For one thing, the cost would beastronomical; for another, America mightsu�er as much as China. The two countries’ economies are intertwined and China owns more American government debtthan anyone else. In war, nations overridesuch factors out of necessity. If an American president tried to override them inpeace out of choice, he would face dissentat home and opprobrium abroad.
The risks of containmentIn any case, a policy of containment risksback�ring, except against an unambiguously hostile China. Unless America couldpersuade large parts of the world to join in,China would still have access to most markets. A belligerent United States would risklosing the very alliances in Asia that it wasseeking to protect. And Joseph Nye, of theKennedy School at Harvard, has arguedthat the best way to make an enemy of Chi
na is to treat it like one.America may one day feel it has no
choice but to focus on security alone,which is what China fears. By contrast, tofocus on economics and forget securitymakes no sense at all. America has vital interests in Asia. It wants to prevent nuclearproliferation in the Korean peninsula andJapan. It has allies to protect and threats topolice. It needs accessible sea lanes andopen markets. America is the world’s preeminent power. It cannot surrender Asiawithout losing in�uence everywhere else.
Hence for the past 15 years America hasfallen back on a twotrack China policy. Barack Obama articulated the �rst track onhis visit to China in November last year. Hetold the students at Fudan University, inShanghai: �The United States insists we donot seek to contain China’s rise. On thecontrary, we welcome China as a strongand prosperous and successful member ofthe community of nations.� This means, asthe president later explained in front of HuJintao, his Chinese opposite number, thatChina’s �growing economy is joined bygrowing responsibilities�.
�Engagement� is backed by a secondpolicy, best described as hedging. Americamust be able to deploy enough force to deter China. Presidents do not articulate thistrack quite so eagerly, but Admiral RobertWillard, head of Paci�c Command, wasclear enough in his remarks to Congressearlier this year: �Untilðit is determinedthat China’s intent is indeed benign, it iscritical that we maintain the readiness ofour postured forces; continually reinforceour commitment to our allies and partnersin the region; and meet each challenge bythe PRC in a professional manner that isconsistent with international law.�
America faced some straightforward, ifterrifying, calculations in its monochromatic relationship with the Soviet Union.By contrast, its technicolour dealings withChina are less apocalyptic, but many timesmore complex�almost unmanageably so.
In principle, the policy’s two tracks �ttogether well. Engagement is designed toreward good behaviour and hedging to deter bad. In practice, however, the hedgerisks undermining the engagement. To seewhy, consider that the existence of two
tracks acts as an excuse to leave importantissues unresolved in America. Chinahawks and China doves can all support thepolicy, because both can continue to thinkthat they will ultimately be proved right.
That is politically handy in Washington, but hardly ideal as a policy. The engagement tends to be run by China specialists in the state department and the hedgetends to be run out of the Pentagon. In theory the policy’s two dimensions should beweighted according to whether or not China’s behaviour is threatening. With thebest will in the world, the departments ofstate and defence do not always work welltogether. All too often, a twintrack policycan function as two separate policies.
Read my lipsThat matters because Mr Obama’s generous words towards China are not taken atface value there. However sincere, no president’s words could be: pledges are brokenand presidents come and go. Americasends a signal when it redeploys navalforces to the Paci�c and its admirals tellCongress that �China’s interest in a peaceful and stable environmentis di�cult toreconcile with [its] evolving military capabilities.� Those judgments make goodsense for America’s security, but they get inthe way of the message that the UnitedStates welcomes China’s rise and has nointention of blocking it.
Hedging is not engagement’s only complication. For much of the past 15 years,commerce drew America towards China.Indeed, globalisation became a large partof the engagement story. But now that onein ten Americans is without work, economic policy has taken on a protectionisttinge. If China loses the political backing ofAmerica’s bigbusiness lobby, which haslately been growing restive at its treatmentin China, then the tone in Washington willshift further. Thus commerce could alsostart to add to Chinese fears that Americawill ultimately choose to block it.
The second doubt about America’s China policy is whether America has fully accepted what engagement asks of it. Thepolicy rests on two notions. First, that China can develop as a �satis�ed power��onethat feels no need to overturn the postwar
Friends, or else
Living with China’s rise will test America’s diplomacy as never before
12 A special report on China’s place in the world The Economist December 4th 2010
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order created and maintained by America.And second, that if China more or lessabides by global norms, America will beable to accommodate its interests. So engagement supposes that China and America can �nd a stable mix of Chinese adherence and American accommodation.
Does China abide by �global norms�?At one time the common belief was that, asBill Clinton said, �when it comes to humanrights and religious freedom, China remains on the wrong side of history.� SomeWestern analysts like to issue caveatsabout devious, farsighted Chinese strategy. Against this racial stereotype, however, it was America, not China, thatfounded its policy on the maxim of SunTzu that it is best to win without �ghting.
Chinese values have changed beyondrecognition since Mao’s day, when terrorwas dismally routine. As Richard McGregor writes in his book, �The Party�, terror isnow used sparingly. Hu Jintao’s Chinaworks on seduction and bribery ratherthan suppression. And yet China is still aoneparty state and terror remains essential to its survival. When the party needsprotecting, it is applied without scruple.
Likewise, in international a�airs Chinano longer backs insurgencies against itsneighbours or routinely adopts intransigent positions, seemingly for the sake of it.Yet the West still �nds it a di�cult partner.American critics such as Gary Schmitt ofthe American Enterprise Institute in Washington accuse China of a �supermarket approach�: it buys what it must, picks upwhat it wants and ignores what it does not.
Hope is not a policyThe hope is that in years to come Chinawill indeed grow to be more democraticand that it will play its part in world a�airs.But, says Richard Armitage, deputy secretary of state under George Bush, �hope isnot a policy.� Given the problems of Western democracies and China’s economicsuccess and relative stability, says RichardWoolcott, a special envoy for the Australian prime minister, China’s conversion toa multiparty democracy no longer seemsquite so inevitable. Just now, the Communist Party looks �rmly in control.
Suppose, therefore, that China remainsa communist, authoritarian, onepartystate with a growing appetite to get its way.Can America accommodate it?
Some American thinkers, like JohnIkenberry, of Princeton University, makethe argument that America has created arulesbased system that is uniquely able toabsorb new members. Institutions like the
United Nations, the G20, the Nuclear NonProliferation Treaty (NPT) and the WorldTrade Organisation (WTO) could, in theory at least, operate even without American leadership. According to this picture,America can accept China so long as it �tsin with this order.
But the picture is �awed. America hasindeed been willing to be bound by rulesin ways that 19thcentury European powers never were. That is one reason why somany countries have been prepared to liveunder its sway. However, when Americathinks important interests are at stake, itstill ignores the rules, just like the next hegemon. In 2005 the bid of the China National O�shore Oil Company to buyAmerica’s Unocal was, in e�ect, blockedafter a public outcry. When America wanted a nuclear deal with India, it rode a coachand horses through the NPT. It fought inthe Balkans in the 1990s and again in Iraqin 2003 without the endorsement of theUnited Nations. It may yet go to war withIran on the same basis.
This is not to dispute the merits of eachcase, though some of those decisionslooked foolish even at the time. Rather thepoint is that superpowers break the ruleswhen they must�and nobody can stopthem. Over time that logic will increasingly apply to China too. America must decide whether �accommodating China�means living with this or denying it.
In fact, there are di�culties with judging whether China is a responsible stakeholder. From the Chinese point of view,America always seems to de�ne acceptable international conduct as falling inwith its own policy. In the words of YuanPeng, of the China Institutes of Contemporary International Relations in Beijing,
America’s complaint is �not that Chinasays no to global responsibility or deniesits role in world a�airs, but rather that it declines to say yes to every US request�.
Accommodation is easy when thatmeans letting China do what Americawants. But will America let China dothings that it does not want? The shadowoverhanging America’s engagement policy is that China will not change enough tosatisfy America and America will not yieldenough to satisfy China. That may soundabstract, but it could at any time becomebrutally real, either on the Korean Peninsula or across the Taiwan Strait.
Korean conundrumNobody knows whether the North Koreanregime will survive, nor what might comeafter Kim Jong Il and Kim Junior. But imagine for a moment that, on the death of theDear Leader, North Korea descends intoanarchy or lashes out, as it did in the islandattack last month that killed South Koreanservicemen and civilians. The ensuing crisis would severely test the capacity of China and America to live with each other.
Everyone would be worried aboutNorth Korea’s nuclear weapons. Americamay want to seize them, but China wouldnot like American soldiers on its borders.Nor would China wish America or SouthKorea to assert control over the North, anally and a bu�er. In the longer run, Chinamay expect to regain the sort of in�uenceover a uni�ed Korea that, as the dominantAsian land power, it has exercised throughout most of history.
This raises a host of questions. WouldAmerica trust China to mop up North Korea’s plutonium and enriched uranium?Would China accept the idea that SouthKorean troops should reestablish order inthe North? Would it allow Korean reuni�cation? If that happened, would Americacontemplate ultimately withdrawing itstroops from the peninsula?
Depressingly little thought has beengiven to these questions. As far as anybodyknows, China is not willing even to discussthem with America, because it does notwant to betray a lack of con�dence in its eccentric ally in the North. Yet, if talkingabout Korea is awkward now, it will beeven more fraught in the teeth of a crisis.
If the two Koreas share the world’s scariest land border, the Taiwan Strait is its scariest sea passage. China’s insistence on reuni�cation is absolute. The story is told ofhow, a few years back, the editor of aShanghainese newspaper celebrated anew semiconductor factory in the city as
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BIDING your time and hiding your powers makes sense if you are a weak
country that expects to become strong.Eventually, though, you will want to takeadvantage of the opportunities that yournew power has created. Has that momentarrived for China? Its military power is,globally, no match for America’s. But thePLA is beginning to deny America’s 65year dominion over the Western Paci�c.Fuelled by nationalist opinion, a debate isunder way within China’s elite overwhether now is the time for the country tostand up. This will in�uence China’s leaders, even though the signs are that for thetime being they would prefer to concentrate on economic growth and their hugedomestic problems.
The outside world is suspicious of China and worried about what sort of powerit will turn out to be. Asian countries aretorn between looking to China for theirwealth and turning to America for their security. If China throws its weight around,they will vigorously resist.
America feels increasingly vulnerable,too. Its armed forces have identi�ed thethreat in the Paci�c. Its economic diplomacy has become aggressive and unpredictable. This further complicates America’s China policy, an uneasy andpotentially confusing combination of engagement and hedging.
That makes for a highly dangerous mixof forces. After a decade in which Americawas distracted by terror and China preoccupied with economic growth, China’s foreign relations are now likely to becomemore di�cult. The risk has been underlined in the past few months by a series ofdisputes, with Japan over some islands,over the sinking of the Cheonan, and overclaims to China’s coastal waters.
Those oneo� rows must not be allowed to frame China’s relations with therest of the world. Yet each assumes inordinate signi�cance, because of the fear thatChina will be aggressive and the suspicionin China that America means to block itsrise. Every incident is seen as a test of whatwill come next.
Prevention, not cureThe solution is to �nd ways to minimisethe mutual mistrust between China andAmerica. This will be di�cult but nothopeless. China is not looking for new colonies and it has no ideology to export. Itshares many American aims: stability, nuclear nonproliferation and, most of all, athriving world economy. These goals arebest served by peace.
Mistrust feeds upon mistrust, aggression upon aggression. In geopolitics, as inlife, the best medicine is prophylactic. Ifever the relationship falls into antagonism,
it will be hard to pull back. The leaders ofAmerica and China talk volubly abouttheir desire for good superpower relations.If they mean what they say, here are tengoals to aim for:¹ China needs to be certain of having a nuclear second strike. As Robert Art of Brandeis University argues, both China andAmerica will feel more con�dent if theyknow their homelands are secure. Chinahas been spending money to ensure that itcould answer a �rst strike. America shouldwillingly surrender this military advantage because it is destabilising�and instability frustrates the overriding policy aim,which is China’s peaceful rise.¹ America should seek to maintain military superiority in the Western Paci�c. Forthe sake of all its Asian alliances, the United States must be able to guarantee thesea lanes and to present a credible threatthat it will come to Taiwan’s aid against aChinese attack. For the time being, it stillcan. But to retain that advantage, Americawill need to harden its forward bases, invest in missile defence and submarinesand counter China’s capacity in asymmetric electronic, cyber and space warfare.This will inevitably add to Chinese insecurity. On the other hand it will add to the security of China’s neighbours. Just now thatis more important.¹ China needs to share more of its nuclear
Strategic reassurance
Many things could worsen relations between China and America. Here are ten ways to make them better
the biggest in China. Because he had forgotten about Taiwan, he had to o�er selfcriticism and take a pay cut.
However, rather than beat Taiwan witha stick, China these days spoons it honeyinstead. Hundreds of �ights a month linkthe mainland to Taipei. The freetradeagreement with Taiwan signed this summer included measures to help Taiwanesefarmers, who tend to support the proindependence Democratic Progressive Party(DPP). China has recently hinted that itmight one day be willing to point its missiles away from Taiwan.
For the moment the policy seems to beworking. The DPP lost power in 2008. Never mind that its successor, the Kuomintang,is the Chinese Communist Party’s old enemy. Under Ma Yingjeou, Taiwan is beingpragmatic. The Taiwanese people appear
to want neither to enrage China by seekingindependence, nor to want to surrendertheir democracy to a oneparty state.
This is just �ne with America. Its armssales to Taiwan continue, but it could justabout live with a single China so long asuni�cation came about peacefully. What itcould not abide would be uni�cation byforce. Strictly, the Taiwan Relations act of1979 does not compel America to come toTaiwan’s aid. However, barring egregiousprovocation of China by Taiwan, Americawould have little choice but to intervene. IfAmerica just stood by, it would lose thetrust of its allies across the world.
Taiwan remains a �ashpoint. Taiwanese democracy could lead to a desire for independence, Chinese nationalism couldmake reuni�cation more urgent, andAmerica could be afraid of appearing
weak. Even now, when the mood is good,the island is a test of Chinese and American restraint. America needs to be clearthat it will not be manipulated: Taiwancannot rashly bid for independence on theassumption that America will protect it.China needs to understand that coercionwould destroy its credentials with the restof the world. America does not expect China to renounce its aims; it does expect China to satisfy them within the system.
Policymakers often sneer at diplomatsfor their compromises and halftruths. Yetthe high calling of diplomacy is to �ndantidotes to the rivalries that poison geopolitics. Not since the 19th century havethey had as great a task as managing the relationship between China and America. InMr Obama’s administration they have aname for this: �strategic reassurance�. 7
14 A special report on China’s place in the world The Economist December 4th 2010
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and conventional military doctrine withAmerica. Compared with the elaboratecoldwar communication between America and the Soviet Union, China and America do not talk. Militarytomilitary linkswere among the �rst things to go whenAmerica sold arms to Taiwan earlier thisyear, just as they were in 2001 when Donald Rumsfeld, then secretary of defence,severed them after that midair collision.Militarytomilitary contacts are not a reward for good behaviour but an essentialpart of building trust. ¹ Asia needs rules to help prevent maritime disputes from escalating. Collisions atsea, for instance, are much easier to manage if the rules have been set out beforehand. Collisions are less likely to happenat all if a code determines what counts as asafe passage. In 2002 ASEAN and Chinasigned an agreement encouraging good behaviour in the South China Sea, but it hasbeen neglected. Only after the recent fussdid China show a renewed interest. ¹ America and China need to talk nowabout the things that look likely to lead todisputes later on. That means contingencies for North Korea�in secret if necessary.As Kenneth Lieberthal, of the Brookings Institution in Washington, DC, argues, it alsomeans talking about such issues as spaceand cyberwarfare. The two countrieshave put a lot of work into their Strategicand Economic Dialogue, but this tends tobe dominated by the news of the moment.It should focus on the future.¹ America should abide by its own rules�and if it must break them, it should factorin the real cost of doing so. America wantsChina to be prepared to live with the worldas it is. If it breaks the rules, it will feed suspicions in China that, one way or the other,its rise will be denied. In terms of security,keeping the rules means avoiding actionsthat, in Mr Art’s words, appear �punitiveand unprovoked�. In economics it meansavoiding protectionism, which is doublyselfdefeating as it both undermines Chi
na’s faith in the system and makes America poorer and less able to defend itself.¹ The Chinese Communist Party shouldstop using censors and commentators tospread a virulent form of nationalism. Itsleaders will �nd foreign relations easier tomanage if they draw less on historic grievances. That will be hard for the party,which craves the legitimacy that comesfrom having seen o� Westerners and theJapanese. But it should eschew resentmentif it wants China to coexist easily with therest of the world.¹ China and America should try to do asmuch business as they can through multinational forums, such as the G20 and theUnited Nations. Bilateral dealings are easier and less timeconsuming. But they areopaque and they leave the rest of Asiawondering what is really going on. Nothing builds the capacity of the system asdoes using it successfully.¹ Asia needs to sort out the thicket of regionalsecurity organisations. With America and Russia set to join as full membersnext year, the East Asia Summit looks themost promising place to become the re
gion’s security forum. That will take a leapof faith from countries like Singapore,which has a special place in ASEAN. However, Asia needs to put collective security�rst for once.¹ Asian countries should put more e�ortinto nontraditional security. According toKatherine Morton, of the Australian National University, a lot of work is to bedone in such areas as climate change,health, the environment, piracy and terrorism, where threats by their nature crossborders. Just as important, however, nontraditional security presents a chance forAsia’s military forces to learn how to worktogether without the usual tensions�aswhen China sent its ships to help an international naval force prevent piracy in theGulf of Aden. Some Asian countries aresqueamish about the e�ect of nontraditional security on their sovereignty. Theyshould swallow hard.
Time to chooseAfter King Goujian won his famous victory over the kingdom to the north, he sorevelled in his power that he turned intosomething of a despot. One faithful adviser �ed for his life, another fell on his swordat the king’s command. In the 1980s someChinese writers saw this as an allegory forthe cruelty of the triumphant Mao Zedong.
There are many interpretations of KingGoujian’s story. It can stand for vengeance,despotism, selfimprovement and muchelse. Likewise, China’s rise is neither guaranteed to be chie�y about the prosperityof 1.3 billion people nor condemned to beabout antagonism or con�ict with the restof the world. The future, like the story, iswhat we make it. 7
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