The US-China relationship is becoming ever more important, not only to each other but to the world in general. There are many difficulties, many points of tension – trade, currency, nuclear weapons, strategic positions in NE Asia. None appear sufficiently large to cause a crisis in the near term. But they could become so if either side forgets that issues cannot be seen entirely as bilateral. They must all be set in the wider context of the stability of a global system on which the peace and prosperity of all major, and many minor, countries depend.
US Deputy Secretary of State Robert Zoellick recently stated that "The US-China relationship is the most important bilateral relationship in the world." He went on to urge China to become a "responsible stakeholder" in the world system, adding "…China would be more than just a member; it would work with us to sustain the international system that has enabled its success."
Zoellick was right, but China could equally urge the US to act in a way which was more accommodating to the other players in the system and that the rules were set by agreement rather than by unilateral flat from Washington. Indeed, the most damning conservative critique of US policy under George W. Bush is that unilateral action has undermined old alliances with Europe and East Asia which were key to the "soft" power and more important than military might in explaining US global dominance. Meanwhile the US must also live with the fact that China's emergence on its own inevitability reduces US influence, at least in Asia.
Taking a global view
The need for a global view is especially pressing when one looks at specifics, starting with trade. It is perhaps fitting that the Doha Round of WTO negotiations climaxes in December in Hong Kong, the entity which is part of China but from the beginning has been an important player in the WTO system. Most focus is on two disputes – between the US and EU and old industrial countries against a group of developing countries. China can play an important role in bridging the latter gap by persuading developing countries to bring down barriers to manufactures in return for real progress on issues such as agriculture. The US in turn can pressure Europe and Japan if it takes a lead on agriculture.
On currency and financial issues, there is a desperate need for China and the US to recognize the global scope of the problem of current account and savings imbalances. These can only be resolved by major macro economic adjustments in the US and throughout East Asia. Global financial turbulence leading to trade protectionism seems inevitable if these issues are not tackled soon. Mutual blame is no help. An ever-more deeply indebted US will be unable to sustain its influence and global trading equilibrium. Likewise, Japan, China and others must recognize their vulnerability to holding huge amounts of US T-bills which will probably have to be devalued before repayment is possible. China and Hong Kong between them have US$300 billion in US Treasury debt alone, and Japan nearly US$700 million. East Asia owns a third of all US federal debt. There is a very real danger of trade relationships being devastated by actions akin to President Nixon's ending of dollar/gold convertibility.
The energy question
On energy access, mutual need to diversify away from hydrocarbons should be leading policy in both countries. Likewise, both should be encouraging oil search everywhere. But whilst China has a clear-cut policy of pursuing national energy interests almost regardless of other political considerations, serious frictions have arisen when China's needs have clashed with US political goals such as isolating Iran, condemning Sudan and attempting to limit Russian influence in central Asia. Whilst not being aimed at China, many in Asia see US policies in these areas as being driven by sectional Middle East interests. Alternatively, the US has too many agendas which are often at cross purposes.
Energy and the related climate change issue are areas where the world in general would welcome leadership and policy coordination by the US and China. The efforts of Europe and Japan are marginal without US backing and where China goes, much of the developing world will follow.
But just as the US must recognize and accommodate the rise of China, so China must recognize the rights of other large countries who are players in the international system. Failure to enlarge the UN Security Council is a major blow to strengthening the multilateral system. China and the US both bear some responsibility for this. It remains a matter of regret that China is the only Asian and only developing country which is a permanent member of the Council and its desire to keep Japan out is clearly a case of putting national sentiments ahead of global security interests.
But China's growing responsibilities do not extend to having to accept western definitions of what is "responsible." It is notable that on such issues as Iranian nuclear ambitions, China's position has been in line with major developing nations such as India and South Africa. And few can doubt the positive role that Beijing has played on the Korean nuclear issue, a role which is tacitly acknowledged by the recent US switch back to dialogue, however tortured with the North through the six-party arrangement.
There are plenty of signs in both Beijing and Washington that their relationship cannot be allowed to deteriorate drastically. But there will be plenty of tests in the next year, and upsets are possible if either party forgets that as global players they must bear in mind the global consequences of their actions on bilateral issues. National interests will inevitably clash but both share an interest in sustaining the international system, allowing it to evolve but within its current framework.
Philip Bowing is former editor of the Far East Economic Review
Whither China: from membership to responsibility?
Excerpted remarks by Robert B. Zoellick, Deputy Secretary of State to the National Committee on U.S.-China Relations, September 21, 2005: China is a player at the table … We need to urge China to become a responsible stakeholder in that system.
The China of today is simply not the Soviet Union of the late 1940s: It does not seek to spread radical, anti-American ideologies; while not yet democratic, it does not see itself in a twilight conflict against democracy around the globe. While at times mercantilist, it does not see itself in a death struggle with capitalism. And most importantly, China does not believe that its future depends on overturning the fundamental order of the international system. In fact, quite the reverse: Chinese leaders have decided that their success depends on being networked with the modern world.
We are too interconnected to try to hold China at arm's length, hoping to promote other powers in Asia at its expense.
On both sides, there is a gulf in perceptions. The overwhelming priority of China's senior officials is to develop and modernize a China that still faces enormous internal challenges … Many Americans worry that the Chinese dragon will prove to be a fire-breather. There is a cauldron of anxiety about China.
The U.S. business community, which in the 1990s saw China as a land of opportunity, now has a more mixed assessment. Smaller companies worry about Chinese competition, rampant piracy, counterfeiting, and currency manipulation. Even larger U.S. businesses – once the backbone of support for economic engagement – are concerned that mercantilist Chinese policies will try to direct controlled markets instead of opening competitive markets. American workers wonder if they can compete.
China needs to recognize how its actions are perceived by others. China's involvement with troublesome states indicates at best a blindness to consequences and at worst something more ominous. China's actions – combined with a lack of transparency – can create risks. Uncertainties about how China will use its power will lead the United States – and others as well – to hedge relations with China.
China has been more open than many developing countries, but there are increasing signs of mercantilism, with policies that seek to direct markets rather than opening them.
President Hu and Premier Wen are talking about the importance of China strengthening the rule of law and developing democratic institutions. We do not urge the cause of freedom to weaken China.
We now need to encourage China to become a responsible stakeholder in the international system. As a responsible stake-holder, China would be more than just a member – it would work with us to sustain the international system that has enabled its success. Cooperation as stakeholders will not mean the absence of differences – we will have disputes that we need to manage.