The Heritage Foundation

Lecture #1256 on China

July 7, 2016

July 7, 2016 | Lecture on China

Thinking Seriously About China

For Americans, China is sometimes an intellectual construct, at times viewed with respect for its economic growth, wariness regarding its international assertiveness, concern over exchange rates and intellectual property rights, or admiration for its culture and its history. In recent years, the news out of China seems disproportionately negative, be it stories concerning the economic slowdown, South China Sea friction, centralization of power under Xi Jinping, or a reduced tolerance for open discussion. But regardless of the challenges, the emergence of China might represent potential opportunity for the United States as well. Foreign policy should not be determined primarily by the problem of the day or the emotions of the moment; we need to step back and try to understand where China is trying to go, where the U.S. is trying to go, how we can find a basis for cooperation where possible and manage differences when they arise.

Key Points

  1. China continues to evolve, but the nature of that evolution is uneven. Many fundamental questions about its role in the world and the relationship between state and society are still being addressed.
  2. Chinese leaders tend to pursue two goals: to project power in their region and to seek regional stability so that all countries share the benefits of a peaceful international system. It is easy to see contradictions between these two goals if they are not well managed.
  3. Not surprisingly, regime preservation and assertion of power remain the two primary determinants in foreign policy formulation.
  4. Both China and the United States see their future as one of peaceful leadership, respectful of other states and contributing to global structures and solutions, but getting to this new plateau will require vision and flexibility from each side.

Thank you to Ed Feulner for the kind introduction, and let me also thank The Heritage Foundation for hosting me today. I have had the privilege of serving on the Advisory Council of Heritage’s Asian Studies Center for a number of years, and I am grateful for the good work it does.

We are here today to discuss U.S.–China relations, and the title of my speech was selected with deliberation. “Thinking Seriously About China” reminds us that foreign policy should not primarily be determined by the problem of the day or the emotions of the moment, but that we should take a step back and try to understand where China is trying to go, where the U.S. is trying to go, and how we can find a basis for cooperation where possible. At the same time, we must acknowledge that there are serious differences in policy which can lead to friction, and this requires astute management as well.

Where Is China Going?

So where is China going? If we look at the media reports, there is a lot of bad news out of China: economic slowdown, deterioration in business conditions for international firms, retrogression in civil society, a series of Hong Kong issues, downturn in cross-Strait relations, centralization of power, quality of life issues, and—perhaps most troubling for the U.S.—ongoing South China Sea friction.

In my view, this bad news is somewhat overstated. China’s economy is slowing from peak growth rates but is still among the best-performing in the world. There is deterioration in social structures, but most of the population still enjoys the best quality of life in the history of China.

To sum up, if we look at longer-term trends in China—perhaps since the ascendency of Deng Xiaoping in 1979—most people would come to a generally positive assessment of China’s transformation. However, if we look at shorter-term trends—for instance, how China has evolved over the past few years—most people would come to a less positive assessment.

Most significantly, two of the more widely discussed theories about China have been brought into question: convergence theory and integration theory.

  • Convergence theory holds that, given the complexity of modern economies and the requirements to deliver government services, the nature of societies and government structures tend to converge as countries become more affluent.
  • Integration theory holds that state behavior will be modified by international structures and norms, and with the advent of globalization, nations will find it increasingly beneficial to adapt a collaborative approach on international issues.

Both of these theories have at least partial validity, in my opinion, but there are countervailing tendencies in China as well. China’s successful move to capture the benefits of a market economy does not automatically mean that China will try to capture the benefits of more open social structures. China’s successful membership in the World Trade Organization and other international bodies does not automatically mean that China views international arbitration on the South China Sea as useful. Indeed, comments from China on this issue tend to be highly critical of the international legal process.

So China continues to evolve, but the nature of that evolution is uneven. China remains perhaps the only nation of consequence for which many fundamental questions about its role in the world and the relationship between state and society are still being addressed. Not surprisingly, regime preservation and assertion of power remain the two primary determinants in foreign policy formulation.

Where Is the United States Going?

And where is the U.S. going? This question might be more complicated than it appears. The U.S. was forced into a world leadership role some 75 years ago, and by dint of its economic and military strength, it has maintained that position ever since. Recent years have seen an economic slowdown, a reduction in military capability, a diminution in alliance relationships (some of this for good reasons, I might add); and in this election year, we must also note a decline of public faith in our institutions.

I would also note that, despite this somewhat gloomy portrait, the U.S. remains the strongest economic and military power in the world. America’s international leadership has been the basis for much of the peace and prosperity which the world, including China, has enjoyed since the last global conflict.

So my starting position is guardedly positive. The U.S. should not view China’s growth as intrinsically objectionable. Nor should China view the U.S. dominant position as intrinsically so.

The good news in U.S.–China relations is that China does not subscribe to a global ideology antithetical to U.S. interests. There is no basis for concluding that China’s rise means a new Cold War. If anything, China tends to take a narrow view of foreign policy, based on national self-interest and focused heavily on its border states and “near abroad.”

Challenges of China’s Foreign Policy

The challenges of China’s foreign policy are several. Although we could argue that Chinese civilization originated the idea of statecraft at roughly the same time as the great classical thinkers in the West, China has limited experience in modern state diplomacy. For most of its history, China has either been a hegemonic power, dominating its neighbors, or in more recent times a victim of hegemony, being dominated and even invaded by others. But modern statecraft allows nations to participate in an international system and to calibrate their interests against those of other parties in order to reach goals: a give-and-take process, in other words, that allows nations to assert their position but without causing unacceptable damage to others’ interests or destabilizing the international system.

This takes me to my second concern about China. As one might expect with a single-party system and government-controlled media, bad news does not easily flow upwards. The Chinese government is probably the most insular of all major powers. This makes broad cost-benefit analysis difficult and places a high degree of automaticity in government decision-making when sometimes agility is required.[1] Chinese leaders tend to pursue two goals: to project power in their region and also to seek stability in the region so that all countries share the benefits of a peaceful international system. It is easy to see contradictions between these two goals if they are not well managed.

For Americans, let me also share some concerns. Unhappiness is not a policy. Criticism is not a policy. Given the open nature of U.S. society, which I support, it is no surprise that public criticism is robust, with concerns over China sometimes at the top of the list. However, in my view, it is more useful to pursue policies that move us toward the desired outcome rather than just dwell on our reasons for unhappiness.

I am not in a position to advise either government on steps they should take, but I am glad to have friends in Beijing and in Washington with whom I can have constructive discussions. Let me offer a few suggestions from these discussions as to how both countries might improve their international positions.

Suggestions for China

  • In South China Sea policy, if China takes the absolutist view that “we are 100 percent correct and everyone else is 100 percent incorrect,” it risks harming its own interest. Maximizing territorial claims and buildups in contested territories should be balanced with the value of friendly neighbors and defined “rules of the road.”
  • Elevate the Ministry of Foreign Affairs to the Politburo Standing Committee. China is perhaps the only major power which does not have its Foreign Ministry (or equivalent body) participate in the highest levels of government.
  • Require a certain tier of flag/general officers to study abroad or serve abroad. In the U.S. military, it is a soft requirement for generals and admirals to have served abroad or to have studied abroad. This gives American military leaders considerable connectivity with foreign counterparts, and it would help China to develop this capability as well.
  • China faces an enormous problem of steel overcapacity, but it is politically sensitive to reduce employment in state-owned enterprises. Consider a shift at the steel mill from steel production to pollution control and environmental remediation. Perhaps 10 percent of resources currently devoted to steel production could be reallocated in this fashion: no loss in employment and better outcomes.

Suggestions for the United States

  • Be careful about adopting a policy of “reflexive oppositionism” to Chinese initiatives. For instance, what was gained by opposing the Asian Infrastructure Investment Bank? The U.S. should not feel obligated to oppose every Chinese initiative.
  • The Trans-Pacific Partnership is an important step for the U.S. It can move closer to China by being better anchored in the region.
  • Show resolve on South China Sea issues. If the U.S. sends mixed signals, it prolongs the friction. By showing consistency, we help all parties move to a resolution.

In sum, there are paths forward for both nations.

Conclusion

Let me close with a final thought. When I ask friends in China what type of world they want to see, their answers are not radically different from when I ask the same question of friends in the U.S. Both countries see their future as one of peaceful leadership, respectful of other states and contributing to global structures and solutions. How the two nations get to this new plateau will require vision and flexibility from each side, but if our nations can travel as far over the next few decades as we have over the past few decades, both sides have reason for optimism.

—Ambassador Franklin L. Lavin works out of Shanghai, where he serves as CEO of Export Now. He previously served as Undersecretary for International Trade at the U.S. Department of Commerce, where he was lead negotiator for China. He has also served as U.S. Ambassador to Singapore (2001–2005).

About the Author

Related Issues: China

Show references in this report

[1] Frank Lavin, “China as an Autopilot Nation,” The Wall Street Journal, July 22, 2015, http://www.wsj.com/articles/china-as-an-autopilot-nation-1437585979 (accessed June 16, 2016).