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A ChinaFile Conversation

Donald J. Trump, president-elect of the United States, spent much of his antagonistic campaign blaming China for many of America’s economic ills, and repeatedly making thinly veiled threats of a U.S. trade war with Beijing. How should Trump engage with the carefully selected leaders of the Chinese Communist Party? And how might they respond? —The Editors

Comments

Tuesday, November 8, 2016 – 1:10pm

James Holmes

President-elect Trump must safeguard freedom of the sea forcefully and often. America’s incoming chief magistrate can start by reaching across the aisle and incorporating a passage modeled on John F. Kennedy’s 1961 inaugural into his inaugural address in January. Kennedy’s bracing language can be repurposed to counter China’s challenge to the liberal maritime order on which all trading nations’ prosperity hinges.

A JFK-inspired inaugural might go something like this:

“Let every nation know, whether it wishes us well or ill, that we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe,” to assure freedom of the sea. This much we pledge—and more.

To old allies, we pledge the loyalty of faithful friends. United, there is little we cannot do. Divided, there is little we can do—for we dare not meet a powerful challenge at odds and split asunder.

To other seafaring peoples, we hope to welcome you into a fraternity of maritime liberty. We shall always hope to find you strongly supporting your own rights.

And we implore you to remember that, in the past, those who foolishly sought safety by riding the back of the tiger ended up inside. So it will be today in the China seas.

Trump should put steel behind unflinching words. Upholding freedom of the sea is about waging diplomacy toward influential audiences. What audiences? U.S. naval officialdom seems to think China’s navy is the principal audience for “freedom-of-navigation” demonstrations: a ship or plane does something that contravenes Beijing’s unlawful claims, Chinese mariners on scene see it, the point is made.

Not so. China’s navy is just a tool of Chinese statecraft. Influencing its views makes little difference. Shipborne diplomacy should mold opinion in Beijing, in allied countries such as Japan and Australia, and among vacillating friends—notably Duterte’s Philippines. Upholding freedom of the sea means discomfiting antagonists while heartening friends and allies.

To sway perceptions in America’s and liberty’s favor, the U.S. Navy must defy China’s lawlessness. It must do so regularly. And it must explain its actions—and why they matter—in the press. If a tree falls in the forest and no one hears it, it may as well not have fallen. No one hears it. Likewise, if American spokesmen don’t explain a freedom-of-navigation operation, it may as well not have happened. It will do precisely nothing to advance the cause of nautical liberty.

Let’s speak frankly, act boldly, and tell our story well.

Wednesday, November 9, 2016 – 12:13pm

David Dollar

On U.S.-China economic issues there is not much President Trump can do constructively in the next year, as China’s reforms are on hold until political uncertainty is resolved at the Party plenum in November 2017 (and probably longer). The United States can use that year to put itself in a strong position to deal with China on economic issues. The new president’s first trip to Asia should aim to bolster traditional alliances with Japan, South Korea, and Singapore. After some loose talk during the campaign, it will be important to reassure allies that the U.S. is not withdrawing from Asia in either the security realm or the economic one.

President Trump will hear from Asian partners about the importance of the Trans-Pacific Partnership (TPP) or something similar: a deep agreement that involves policies and regulations about investment, state enterprises, intellectual property rights, labor, and environment. The best longer-term strategy for dealing with China is to create a successful regime of open trade and investment that China will aspire to join. It is a shame that TPP has been mischaracterized during the campaign, and it may be difficult to resurrect it under the same name. China is not one of the TPP countries. The U.S. has much more balanced trade and investment relations with the TPP partners than with China, so it is smart to build on that to deepen integration that benefits U.S. firms and workers.

Starting a trade or currency war with China is not a good idea. Labeling China a currency manipulator is fighting the last war, as China recently has been intervening to keep its currency high, not low. If the U.S. imposes high tariffs on Chinese imports, then the smart move for China is to retaliate. China is too big to be bullied in this way.

One area in which the U.S. can constructively take a tougher line on China is to limit the acquisition of U.S. firms by Chinese state-owned enterprises. This is the big asymmetry in the relationship right now. China remains highly closed to foreign investment in many important sectors: media, telecommunications, transportation, finance, energy, and more. Meanwhile, Chinese state enterprises are leveraging their protected markets at home to buy their competitors overseas. This legislation will have to be crafted carefully but it is reasonable to prevent acquisitions by state-directed firms from countries that have no investment agreement with the U.S.

The U.S. and China have been negotiating a Bilateral Investment Treaty, but progress has been slow and the political uncertainty in China makes it unlikely that China would make an attractive offer within the next year. It makes sense to continue those discussions, but progress is likely to depend on the two issues above: whether the U.S. is pursuing something like TPP, and restricting the asymmetric access of Chinese firms to the U.S. market.

There will continue to be various dialogues between the two governments, and the form of the dialogues is not a very important issue. The existing Strategic and Economic Dialogue has become too big and ceremonial to be much use. Ideally, the one big dialogue can be broken into its constituent parts. It will be difficult to make progress on economic issues in the next one to two years, but it is important to keep on talking.

Thursday, November 10, 2016 – 8:51am

Melissa Chan

American citizens have been distracted, trapped in a months-long, nationwide reality television show with contestants Hillary Clinton and Donald Trump. Already disinclined to pay much attention to the country’s foreign affairs, few beyond those in policy circles have worried as Philippine President Rodrigo Duterte made overtures to China over the last few months and flounced his country’s long alliance with the United States. Arguably, with political and military bilateral relations at stake, the first thing a President Donald Trump might want to do is to reach out and reengage with Manila, and to push back against China’s steady assertiveness in the region.

Some believe, however, that the U.S.-Philippines relationship is quite safe. Duterte has postured to the people, telling President Obama to go to hell and threatening to end joint military exercises between the two countries, but his defense secretary, Delfin Lorenzana, is actually an establishment pick with close and long relationships with his American military counterparts. He spent years overseas as a defense attaché and worked at the embassy in Washington, D.C. Still, events in the Philippines have shown how quickly China can step into the picture when the U.S. isn’t looking.

This takes us back to the Asia pivot.

Even before dealing with the Philippines, the first thing Trump should do in regards to China when he takes office is to reassess, redefine, and recommit to the Asia pivot. Any action with the Philippines or any other country, or comment on any incident (including current events in Hong Kong) should happen as part of a greater strategy in the region. The United States has long denied that the pivot has been meant to contain China. But China’s own actions, from the South China Sea to its unwillingness to pressure a nuclear North Korea, has rattled its neighbors. If America’s intention is to ensure stability in the region, its pivot will mean curbing China’s power plays.

Despite the fact that it was then Secretary of State Hillary Clinton who rolled out the pivot, it is not inconceivable that a Trump administration would take up the mantle. Peter Navarro, one of Trump’s policy advisors, recently observed in a piece in Foreign Policy that “U.S. partners like Japan, South Korea, India, and even Myanmar and Vietnam continue to seek closer ties with Washington across the spectrum,” going on to add that a Trump presidency would increase the size of the U.S. navy. That would certainly show that this time, the rebalance will be a real one. Another possibility for Trump might include a first visit as president to Asia, with a policy speech delivered in Japan.

Trump’s major challenge will be his campaign commitment against the Trans-Pacific Partnership (TPP). He will need to demonstrate some kind of economic pillar to the pivot, but without the TPP. That might not be possible.

Ash Carter, writing in the latest issue of Foreign Affairs, says that “China’s model is out of step with where the Asia-Pacific wants to go; it reflects the region’s distant past, rather than the principled future the United States and many others want, and its approach is proving counterproductive.” The defense secretary has doubled down on the pivot—Trump needs to do so, as well.

Thursday, November 10, 2016 – 1:03pm

Derek Scissors

Not surprisingly, I clash with David Dollar on the best approach to Sino-American economic relations. We agree that next year may be unproductive due to political events in China, just as this year has been constrained by political events in the U.S. We also agree that the Strategic and Economic Dialogue is more bloated than beneficial.

Further, there is probably a consensus that the best long-term strategy with regard to China begins with a healthy and vibrant American economy. Even with regard to China, President Trump should start with domestic economic policy. Sound corporate tax reform, as a leading example, can boost the competitiveness of American workers and companies both.

There is no consensus on the Trans-Pacific Partnership (TPP). Trade agreements should not be strategic tools, rather they should offer hefty economic benefits.

When I read the (entire) TPP a year ago, I did not find much in the way of net economic benefits. When the International Trade Commission evaluated the TPP six months ago, they drew similar conclusions. There is no point being comprehensive, either in the number of parties or the number of issues, when the ensuing results are too weak to genuinely constitute a new, beneficial set of rules.

Nor should the U.S. be especially concerned about antagonizing China economically. It’s true that the criticism of Beijing’s exchange rate policy long made by protectionist groups, and picked up by the Trump campaign, is overblown. Trying to link the value of the RMB to American jobs requires contortions, since the most salient evidence shows they are not meaningfully connected.

However, the President-elect is right when he notes that the U.S. has greater leverage. China can certainly retaliate against American trade and investment actions, but unbalanced market access means it has far more to lose.

The important matter is whether any sanctions make sense for the U.S. David suggests limiting acquisitions of American assets by Chinese state-owned enterprises (SOEs). This would be essentially meaningless. Private Chinese investors have always outpaced SOEs in the American market and the surge in Chinese investment this year is being driven by private or quasi-private companies such as HNA.

On the security side, a private Chinese firm is just as likely as an SOE to turn sensitive technology over to the People’s Liberation Army. Neither has the option to resist coercion to this effect and they should not be treated differently.

A more fruitful approach would be to target IP theft, including cyber. China attacks U.S. comparative advantage in innovation by stealing IP and retaliating along these lines is justified if it hits the right targets. Chinese firms that have benefited from stolen American IP should be barred from the market for a length of time commensurate with the theft.

Chinese behavior and Trump campaign rhetoric make it almost impossible to open the next phase of the bilateral economic relationship with more U.S. cooperation. The Trump administration should bear in mind that Chinese domestic politics will be sensitive next year. But it should make clear that China must become a better partner, or the economic relationship will shrink.

Thursday, November 10, 2016 – 1:15pm

Zha Daojiong

The bilateral relationship between China and the United States is structured in such a firm manner that a change of presidency on the U.S. side or a change of top leadership on the Chinese side is unlikely to be as earth-shaking as some analysts make it out to be. The American election system has worked. China works with whomever lands in the White House, regardless of what was said on the campaign trail.

The set of issues for both countries—from economics, to security, to regional and global governance—will remain unchanged under President Trump. So, the expectation from around the world is that neither Beijing nor Washington seeks to rock the boat of regional/global tranquility.

Trump did not hold public office or rise to any military rank. There is little knowledge about him in China. Also, his election support team did not make as strong an effort to relate to Chinese think tanks as that of the Democratic candidate.

So, from this point on, then, Beijing should make a great, proactive effort to relate to the new administration in Washington, D.C. Also, Beijing won’t be the only one in town, and it will have to compete hard for Trump’s attention.

On some of the headline issues, China was NOT a major campaign issue for either Trump or Clinton. Neither candidate chose to give a speech on China policy at any considerable length. That is a reflection of the reality that China was NOT on the mind of average voters. It was rather the China think-tankers that projected a different image.

It would be unwise and counterproductive for China to take Trump’s campaign rhetoric at face value. After all, Trump will be working within an established and mature U.S. governing system.

Among many other channels of communication between Beijing and Washington, the bilateral Strategic and Economic Dialogue should continue, as it offers a channel for a wide range of bureaucracies on both sides to relate to each other. Each side must find ways to make the dialogue more productive to willing participants.

In terms of managing East Asian regional security, well, it is very, very important to keep in mind that all countries and societies dotting the maritime space—not just the United States and China, regardless of military alliance arrangements in place or desired—have a say about its governance. Although the populations of these countries do not get a vote on either Beijing’s or Washington’s course of action, there is a silent majority out there. That preference, though often unarticulated in the Western or Chinese media, will be the decisive check on American and/or Chinese behaviors.

Thursday, November 10, 2016 – 1:38pm

Chen Weihua

It could be misleading for people to take their cues just from what President-elect Trump said on the campaign trail, such as his promise to impose a 45 percent punitive tariff on Chinese imports and his threat to label China a currency manipulator.

Past U.S. presidential candidates also made crazy vows about China during their campaigns, but forgot them quickly once elected. What’s more, in Trump’s case, his proposed punitive tariffs wouldn’t pass Congress or get past the U.S. business community.

What deserves more attention are Trump’s words and deeds after the election. His victory speech displayed quite a contrast to his campaign rhetoric. It was quite encouraging when he said “we will seek common ground, not hostility; partnership, not conflict.”

It reflects the same spirit of President Xi Jinping’s congratulatory message on Wednesday to President-elect Trump, a message about no conflict, no confrontation, mutual respect, and win-win cooperation. Trump also previously expressed that he was willing to meet Kim Jong-un of North Korea and to improve ties with Russia.

Such a tone and such gestures are welcome given that the U.S. government has intervened excessively in the past in other nations’ internal affairs and U.S. leaders have had a tendency to lecture other countries.

The U.S. seems to believe that by imposing pressure and costs on other nations, it will bring them to their knees. In reality, it often makes them more united at home and more determined and stronger in resistance to such pressure.

The Obama administration is responsible for the chaos in Syria and some other parts of the world. With its pivot to Asia strategy, Obama also is partly responsible for the vicious action/reaction-cycle with China in the East- and South China Seas, perceived widely by countries in the region as a China-containment policy according to a recent study from the Center for American Progress.

Despite her contribution to U.S.-China relations as secretary of state, Hillary Clinton’s hawkish instinct was deeply concerning to those who feared her election could further raising tensions in the China-U.S. relationship.

Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore, said last week on CNN that Clinton, if elected, would have to unlearn many of the instincts she had in the past and develop new instincts.

It is true that while Trump’s victory speech contains encouraging messages, he still has not made a foreign policy speech, especially regarding China. It is unknown who will become his secretary of state and his national security advisor, and who will staff his foreign policy advisor’s team.

The growing interdependence between the two largest economies and the huge potential for mutual cooperation are compelling reasons for the two nations to expand cooperation and better manage their differences, differences that may exist for a long time to come.

For example, China has successfully solved its land border disputes with 14 of its neighbors, a great track record. The U.S. needs to show more confidence that countries in the region have the wisdom and ability to solve their maritime territorial disputes through bilateral negotiations over a period of time or shelve the differences for the next generations.

Thursday, November 10, 2016 – 4:02pm

Shawn Shieh

I’m only going to suggest one thing that President Trump can do to deal with China. It may seem a small item on a crowded agenda, but it’s an important one and it needs Trump’s immediate attention.

Trump will be sworn in as president the same month that China’s Foreign NGO Law goes into effect. That law is sweeping in its scope. It targets not only human rights and advocacy organizations, but also many nonprofits that we tend not to equate with NGOs yet are critical to a healthy U.S.-China relationship: trade, business and professional associations, charitable foundations, educational institutions, labor unions, think-tanks, and arts, culture, and sporting organizations.

Over the last 25-30 years, American NGOs have played an important role in promoting people-to-people exchanges, building the capacity of Chinese government and nongovernment organizations, and providing technical and policy support to help China address the many problems facing a rapidly developing country. Many of them developed close, long-term ties with Chinese government agencies, universities and research institutions, and social organizations of all varieties.

This constructive, tight-knit cooperation between Americans and Chinese is now threatening to come unraveled. In the last few years, as President Xi Jinping has exercised a more muscular, nationalistic approach to bolstering the rule of the Communist Party, China’s civil society, media, and universities have come under siege. Rights lawyers and activists have been rounded up, and Chinese media and universities have been told to toe the Communist Party line and resist Western influences. This year saw the passage of the Foreign NGO Law, a law which requires all overseas NGOs (including those registered in Hong Kong, Macao, and Taiwan) to either register a representative office or report their activities in China. Many American NGOs and nonprofits fear this law may make it much more difficult for them to operate in China, and some have considered pulling out.

A Trump administration should work closely with Chinese leaders to ensure that the law does not set back years of constructive collaboration between Americans and Chinese. It should closely monitor the Foreign NGO Law to ensure the law is implemented fairly and impartially so that certain NGOs are not punished or discriminated against simply because of the issues they address.

It also should ensure that American and Chinese civil society leaders are represented in high-level dialogues and initiatives on par with American and Chinese business leaders. In a 2015 report, the U.N. Special Rapporteur for Freedom of Assembly and Association noted that many countries are more welcoming to business than to civil society organizations, and called for states to provide more equitable treatment to the latter. “Both [businesses and civil society organizations] are crucial to economic and political development; and both have the potential to enhance the protection and promotion of human rights.”

Unfortunately, the Foreign NGO Law threatens to do the reverse by raising high barriers to entry for foreign nonprofit organizations. A foreign company looking to make a profit by setting up factories to produce components for smartphones will have greater access to China than a foreign NGO seeking to improve wages and working conditions in those factories.

In short, a healthy U.S.-China relationship depends on a strong civil society (both on the U.S. and Chinese side) to support the work of both sides on critical issues such as rule of law, governance, and sustainable economic growth that will benefit the very working-class families that voted Trump into the White House.

Thursday, November 10, 2016 – 4:36pm

Andrew J. Nathan

During the infotainment program called “The Candidate,” we saw two characters named Trump. One was a tough guy who never loses. If this character takes office, he’ll slap tariffs on China, enhance secondary sanctions on North Korea that will hurt the Chinese finance industry, squeeze more money out of Japan and South Korea to support even stronger U.S. forces in Northeast Asia to contain China, increase arms sales and diplomatic support to Taiwan, enhance security cooperation with Vietnam, India, and other regional partners, and build up the U.S. Navy and deploy it more frequently in the South China Sea. I don’t expect Xi Jinping to fade away in the face of these actions, so we will be in for an intensified arms race and (at a minimum) rising tension in U.S.-China relations that will alarm our allies and security partners who live closer to China than we do.

The other Trump was the practitioner of the art of the deal. If he takes office, he will look for an economic and strategic grand bargain with China, some version of a regional condominium that reduces American resistance to the spread of Chinese military and political influence in Asia in exchange for greater opening of the Chinese economy to U.S. exports and investment, Chinese investment in U.S. infrastructure—and perhaps a few permits for Trump hotels and towers thrown in as a side payment. I imagine Xi Jinping would like this deal. But Japan, South Korea, Taiwan, the ASEAN countries, and Australia would no longer be able to count on U.S. support as a counterbalance to Chinese influence, and they’d either have to tilt to China or (in the case of Japan and perhaps even South Korea and Taiwan) decide to build up their independent military capabilities or even go nuclear.

Neither of these outcomes is desirable. I therefore hope that President Trump will play neither of these characters in office, but will build on the well-balanced China policy that President Obama and Secretary Clinton crafted. Under this policy, the U.S. sought cooperation with China where common interests existed, such as climate change, North Korea, and nonproliferation, and where interests clashed—such as over the issue of whose navy would dominate the South China Sea—the U.S. neither overreacted nor retreated, but held firm to its positions on lawful resolution of disputes and freedom of navigation. Trump should defend American interests with respect to Taiwan, the Senkaku Islands, Chinese economic protectionism, and human rights. But to do so effectively, he has to focus on those factors that will determine how both China and our Asian allies assess U.S. power: our domestic problems. We need to bridge political polarization, diminish inequality, and rebuild our infrastructure if we are to have the credibility that we need to maintain our influence in Asia. If we can’t make things work at home, we will rightly be seen as a has-been power, and other nations will act accordingly.

Friday, November 11, 2016 – 11:12am

Pamela Kyle Crossley

It’s a surprise to me that so many Chinese commentators think they know what to expect of Trump. Trump’s pronouncements against the cliché of “foreign entaglements” can be taken to mean that he will neglect or outright disavow alliances, leaving China to take its pick of nations left on the dangling end of an American relationship. China can flip more conventional ASEAN allies as has been done with the Philippines, or pursue a “special” relationship with the U.K. of the sort that India is building; offer closer friendship to Mexico, Egypt, Morocco; put more pressure on Singapore to abandon strategic and educational partnerships with the U.S.; isolate Taiwan by befriending the nations of Central America and the Caribbean. If the United States were to eschew international obligations —including all of those relating to carbon emissions—the possibilities for China to assume the initiative, or even unchallenged leadership in regions of its choice, would appear to be unlimited.

Of course Trump has also said he wants America to “win” at everything everywhere. He has singled China out as the U.S.’s main competitor. He claims that China siphons off American jobs, uses currency manipulation and illegal dumping to undercut American exports and trade balances, created a fictional “global warming” panic to impose crippling regulation on American industry, and that the totality of Chinese grifting has produced the “biggest theft in American history.” How seriously Trump takes these charges is less important than the fact that he has spent a couple of years ensuing that a major portion of the American public believes them. Even if Trump were able (he is now learning that he isn’t) to just abandon American military, economic and security obligations throughout the world, he would clearly make China an exception—which means, by extension, that he would be right back in the South China Sea and the Korean peninsula, and perhaps more inclined than the current U.S. administration to expand the U.S. presence in Africa for no other reason than to obstruct further expansion of Chinese presence there. With or without expertise and tempered counsel, Trump will make it a point to get in China’s way, which the U.S. has not done for almost four decades.

There is a more potent danger for China in Trump’s election. Like Britain’s exit from the European Union, Trump’s election is one of the more salient symptoms of the plateau of globalization. Europe and North America are no longer willing to risk their standards of living in exchange for more fluid access to markets, labor, and resources; the resulting tensions have depleted their political reserves. Trump’s inclination is to put a magic membrane around the U.S. that keeps jobs and technology in and immigrants out. His election is a signpost pointing toward tariffs, import restrictions and military enforcement of trade and resource privileges (including transport of American imports and exports through the South China Sea). Trump as some kind of neo-isolationist is merely one of his many illusions.

Friday, November 11, 2016 – 11:54am

David Schlesinger

Pity the Chinese human rights campaigner or intellectual who looked to the United States as a beacon, a model, a source of pressure or merely a font of rhetorical succor. What now under President Trump—what signals can he give to China, what signals will he give to China, and what cues will President Xi Jinping be looking for and receive?

In 1989, American journalists brought China’s Tiananmen demonstrations to living rooms and the world, the students’ Goddess of Democracy rhyming visually and symbolically with the Statue of Liberty. The U.S. Embassy was a space of asylum for Fang Lizhi. American lawmakers used their bully pulpits. Sanctions were imposed, for a time, and some kind of bottom line was visible if not always totally clear.

The State Department published its annual Human Rights Report—never much more than an annoying goad in the Chinese side, to be sure, but at least a rhetorical reminder that human rights were (are) a fundamental part of U.S. foreign policy.

But what happens when a U.S. president models himself after strongmen?

Trump’s praise of Putin, in no way a human rights paragon, is not encouraging.

Will the U.S. have any credibility, even if it wished to have, to protest the beating or harassment or jailing of a Chinese reporter when Mr. Trump’s anti-journalist rhetoric and the actions of his supporters have been plainly on view for the world to see?

Will a Chinese labor activist feel any moral support at her back if a Trump administration turns up the heat on domestic expressions of dissent?

Will a Chinese NGO, fighting a draconian new law and regulations, find any joy from the U.S., or only the negative example of the potential defunding and harassment of Planned Parenthood, itself an NGO, in the U.S.?

To be clear, Republicans have traditionally been strong on holding China to human rights standards; a Republican was president during Tiananmen. This has been a bipartisan issue.

But President-elect Trump is a Republican in name only, and his proclivities seem to tend much more to the authoritarian.

In the current atmosphere within China, I can even imagine President Xi thinking that some compromise on trade or currency might be a reasonable exchange in return for a more isolationist Trump administration giving a freer hand in the South China Sea and a more authoritarian Trump giving a freer hand at home. What a bargain.

Even if these are not Trump’s intentions, the signs that they could be are there. And if he doesn’t want these things to happen, he will need to change the signing firmly and quickly to avoid a very tragic result.

Friday, November 11, 2016 – 12:37pm

Paul Haenle

President-elect Donald Trump needs to move quickly to clarify his approach to the Asia-Pacific. Unlike Secretary Clinton, Trump does not have a track record on how he views U.S. interests and policy objectives in the region. Foreign observers have naturally followed his campaign rhetoric closely to gleam insights into what types of policies he might pursue once in office. But the emerging articulations of Trump’s vision for the Asia-Pacific contrast strongly with many of Trump’s campaign promises. The result is a potentially dangerous gap in expectations.

Beijing has concluded that Trump’s transactional, businessman predispositions will lead him to be less inclined to inject human rights and values into his policies and dialogue with China. This may be so. But Chinese are also convinced that Trump’s election signals the ushering in of a period of American isolationism in which Washington will retreat from the world, including from Asia, and abandons its allies. This prospect is warmly welcomed in Beijing. Some Chinese scholars have gone a step further even by contemplating strategic opportunities for Beijing in the South China Sea or in their relations with Southeast Asian states as a consequence of American withdrawal. There is an overarching expectation that Trump’s election will mean less strategic pressure on China in the region.

China may be in for a rude awakening. In the last two days, the policy pronunciations that have emerged from Trump’s advisors paint a very different picture of the president-elect’s Asia policy. In an article forForeign Policy, Alexander Gray and Peter Navarro liken Trump’s vision for the region to Ronald Reagan’s “peace through strength” strategy, wherein a robust a U.S. military presence in the Pacific, strong support for Taiwan as a “beacon of democracy,” and U.S. alliances as “bedrocks of stability in the region,” are key components. To support such objectives, the advisors suggest Trump will seek to repeal defense sequestration, rebuild the U.S. Navy, and stand up to Chinese aggression in the South China Sea.

Gray and Navarro’s “peace through strength” vision sounds quite different from the expectation of U.S. retrenchment that many Chinese developed over the course of the campaign. Paraphrasing former Singaporean Prime Minister Lee Kuan Yew, the authors of the article assert that U.S. military presence in the Asia-Pacific is essential to promote U.S. liberal values and serves as a critical source of regional stability. They criticize the Obama administration’s weak implementation of the military component of its “pivot” policy, precisely the aspect Beijing perceives as being most hostile to China, and explain that despite Trump’s suggestions that America’s allies were not contributing their fair share to sustain U.S. security commitments, his commitment to U.S. allies was unquestionable.

The potential danger is that Beijing’s expectations about Trump’s China policy—that he will pay less attention to the Asia-Pacific and place less emphasis on U.S. alliance relationships—may not come to fruition. This could result in the relationship beginning on an uneasy or negative footing. Former president George W. Bush, who I worked for on the National Security Council staffs, always operated from a principle of “no surprises,” which he believed was a key stabilizing feature in the relationship with China. In that spirit, the first thing the Trump administration can do to promote a positive and constructive U.S.-China relationship is provide a clear articulation of his China and Asia policy in order to allow countries in the region to set realistic expectations for where and how they will be able to work with the new U.S. administration, and areas where policymakers will need to address and manage differences.

Originally by: James Holmes, David Dollar, Melissa Chan, Derek Scissors, Zha Daojiong, Chen Weihua, Shawn Shieh, Andrew J. Nathan, Pamela Kyle Crossley, David Schlesinger, Paul Haenle; Source: Nov 2016, chinafile.com

The candidate used broad and blustery rhetoric to discuss the Communist state. Here’s what his actual policy might look like.

Donald J. Trump, President-elect of the United States, spent much of his antagonistic campaign blaming China for many of America’s economic ills, and repeatedly making thinly veiled threats of a U.S. trade war with Beijing. Yet on the evening of Nov. 13, he had what his team described as a cordial call with Chinese President Xi Jinping. How should Trump engage with the carefully selected leaders of the Chinese Communist Party? And how might they respond? —The ChinaFile Editors

Melissa Chan, broadcast reporter:

American citizens have been distracted, trapped in a months-long, nationwide reality television show with contestants Hillary Clinton and Donald Trump. Already disinclined to pay much attention to the country’s foreign affairs, few beyond those in policy circles have worried as Philippine President Rodrigo Duterte made overtures to China over the last few months and flounced his country’s long alliance with the United States. Arguably, with political and military bilateral relations at stake, the first thing a President Donald Trump might want to do is to reach out and reengage with Manila, and to push back against China’s steady assertiveness in the region.

Some believe, however, that the U.S.-Philippines relationship is quite safe. Duterte has postured to the people, telling President Obama to go to hell and threatening to end joint military exercises between the two countries, but his defense secretary, Delfin Lorenzana, is actually an establishment pick with close and long relationships with his American military counterparts. He spent years overseas as a defense attaché and worked at the embassy in Washington, D.C. Still, events in the Philippines have shown how quickly China can step into the picture when the United States isn’t looking.

This takes us back to the Asia pivot.

Even before dealing with the Philippines, the first thing Trump should do in regards to China when he takes office is to reassess, redefine, and recommit to the Asia pivot. Any action with the Philippines or any other country, or comment on any incident (including current events in Hong Kong) should happen as part of a greater strategy in the region. The United States has long denied that the pivot has been meant to contain China. But China’s own actions, from the South China Sea to its unwillingness to pressure a nuclear North Korea, has rattled its neighbors. If America’s intention is to ensure stability in the region, its pivot will mean curbing China’s power plays.

Despite the fact that it was then Secretary of State Hillary Clinton who rolled out the pivot, it is not inconceivable that a Trump administration would take up the mantle. Peter Navarro, one of Trump’s policy advisors, recently observed in a piece in Foreign Policy that “U.S. partners like Japan, South Korea, India, and even Myanmar and Vietnam continue to seek closer ties with Washington across the spectrum,” going on to add that a Trump presidency would increase the size of the U.S. navy. That would certainly show that this time, the rebalance will be a real one. Another possibility for Trump might include a first visit as president to Asia, with a policy speech delivered in Japan.

Trump’s major challenge will be his campaign commitment against the Trans-Pacific Partnership (TPP). He will need to demonstrate some kind of economic pillar to the pivot, but without the TPP. That might not be possible.

Secretary of Defense Ash Carter, writing in the latest issue of Foreign Affairs, says that “China’s model is out of step with where the Asia-Pacific wants to go; it reflects the region’s distant past, rather than the principled future the United States and many others want, and its approach is proving counterproductive.” The defense secretary has doubled down on the pivot—Trump needs to do so, as well.

Zha Daojiong, Senior Fellow, Asia Society:

The bilateral relationship between China and the United States is structured in such a firm manner that a change of presidency on the U.S. side or a change of top leadership on the Chinese side is unlikely to be as earth-shaking as some analysts make it out to be. The American election system has worked. China works with whomever lands in the White House, regardless of what was said on the campaign trail.

The set of issues for both countries — from economics, to security, to regional and global governance — will remain unchanged under President Trump. So, the expectation from around the world is that neither Beijing nor Washington seeks to rock the boat of regional/global tranquility.

Trump did not hold public office or rise to any military rank. There is little knowledge about him in China. Also, his election support team did not make as strong an effort to relate to Chinese think tanks as that of the Democratic candidate.

So, from this point on, then, Beijing should make a great, proactive effort to relate to the new administration in Washington, D.C. Also, Beijing won’t be the only one in town, and it will have to compete hard for Trump’s attention.

On some of the headline issues, China was not a major campaign issue for either Trump or Clinton. Neither candidate chose to give a speech on China policy at any considerable length. That is a reflection of the reality that China was not on the mind of average voters. It was rather the China think-tankers that projected a different image.

It would be unwise and counterproductive for China to take Trump’s campaign rhetoric at face value. After all, Trump will be working within an established and mature U.S. governing system.

Among many other channels of communication between Beijing and Washington, the bilateral Strategic and Economic Dialogue should continue, as it offers a channel for a wide range of bureaucracies on both sides to relate to each other. Each side must find ways to make the dialogue more productive to willing participants.

In terms of managing East Asian regional security, well, it is very, very important to keep in mind that all countries and societies dotting the maritime space—not just the United States and China, regardless of military alliance arrangements in place or desired—have a say about its governance. Although the populations of these countries do not get a vote on either Beijing’s or Washington’s course of action, there is a silent majority out there. That preference, though often unarticulated in the Western or Chinese media, will be the decisive check on American and/or Chinese behaviors.

Andrew J. Nathan, professor of political science, Columbia University:

During the infotainment program called “The Candidate,” we saw two characters named Trump. One was a tough guy who never loses. If this character takes office, he’ll slap tariffs on China, enhance secondary sanctions on North Korea that will hurt the Chinese finance industry, squeeze more money out of Japan and South Korea to support even stronger U.S. forces in Northeast Asia to contain China, increase arms sales and diplomatic support to Taiwan, enhance security cooperation with Vietnam, India, and other regional partners, and build up the U.S. Navy and deploy it more frequently in the South China Sea. I don’t expect Chinese President Xi Jinping to fade away in the face of these actions, so we will be in for an intensified arms race and (at a minimum) rising tension in U.S.-China relations that will alarm our allies and security partners who live closer to China than we do.

The other Trump was the practitioner of the art of the deal. If he takes office, he will look for an economic and strategic grand bargain with China, some version of a regional condominium that reduces American resistance to the spread of Chinese military and political influence in Asia in exchange for greater opening of the Chinese economy to U.S. exports and investment, Chinese investment in U.S. infrastructure — and perhaps a few permits for Trump hotels and towers thrown in as a side payment. I imagine Xi would like this deal. But Japan, South Korea, Taiwan, the ASEAN countries, and Australia would no longer be able to count on U.S. support as a counterbalance to Chinese influence, and they’d either have to tilt to China or (in the case of Japan and perhaps even South Korea and Taiwan) decide to build up their independent military capabilities or even go nuclear.

Neither of these outcomes is desirable. I therefore hope that President Trump will play neither of these characters in office, but will build on the well-balanced China policy that President Obama and Secretary Clinton crafted. Under this policy, the United States sought cooperation with China where common interests existed, such as climate change, North Korea, and nonproliferation, and where interests clashed — such as over the issue of whose navy would dominate the South China Sea — the United States neither overreacted nor retreated, but held firm to its positions on lawful resolution of disputes and freedom of navigation. Trump should defend American interests with respect to Taiwan, the Senkaku Islands, Chinese economic protectionism, and human rights. But to do so effectively, he has to focus on those factors that will determine how both China and our Asian allies assess U.S. power: our domestic problems. We need to bridge political polarization, diminish inequality, and rebuild our infrastructure if we are to have the credibility that we need to maintain our influence in Asia. If we can’t make things work at home, we will rightly be seen as a has-been power, and other nations will act accordingly.

David Schlesinger, founder, Tripod Advisors:

Pity the Chinese human rights campaigner or intellectual who looked to the United States as a beacon, a model, a source of pressure or merely a font of rhetorical succor. What now under President Trump — what signals can he give to China, what signals will he give to China, and what cues will Xi be looking for and receive?

In 1989, American journalists brought China’s Tiananmen demonstrations to living rooms and the world, the students’ Goddess of Democracy rhyming visually and symbolically with the Statue of Liberty. The U.S. Embassy was a space of asylum for Fang Lizhi. American lawmakers used their bully pulpits. Sanctions were imposed, for a time, and some kind of bottom line was visible if not always totally clear.

The State Department published its annual Human Rights Report — never much more than an annoying goad in the Chinese side, to be sure, but at least a rhetorical reminder that human rights were (are) a fundamental part of U.S. foreign policy.

But what happens when a U.S. president models himself after strongmen? Trump’s praise of Putin, in no way a human rights paragon, is not encouraging. Will the United States have any credibility, even if it wished to have, to protest the beating or harassment or jailing of a Chinese reporter when Mr. Trump’s anti-journalist rhetoric and the actions of his supporters have been plainly on view for the world to see? Will a Chinese labor activist feel any moral support at her back if a Trump administration turns up the heat on domestic expressions of dissent? Will a Chinese NGO, fighting a draconian new law and regulations, find any joy from the United States, or only the negative example of the potential defunding and harassment of Planned Parenthood, itself an NGO, in the United States?

To be clear, Republicans have traditionally been strong on holding China to human rights standards; a Republican was president during Tiananmen. This has been a bipartisan issue. But President-elect Trump is a Republican in name only, and his proclivities seem to tend much more to the authoritarian.

In the current atmosphere within China, I can even imagine President Xi thinking that some compromise on trade or currency might be a reasonable exchange in return for a more isolationist Trump administration giving a freer hand in the South China Sea and a more authoritarian Trump giving a freer hand at home. What a bargain.

Even if these are not Trump’s intentions, the signs that they could be are there. And if he doesn’t want these things to happen, he will need to change the signing firmly and quickly to avoid a very tragic result.

Paul Haenle, director, Carnegie-Tsinghua Center:

President-elect Donald Trump needs to move quickly to clarify his approach to the Asia-Pacific. Unlike Secretary Clinton, Trump does not have a track record on how he views U.S. interests and policy objectives in the region. Foreign observers have naturally followed his campaign rhetoric closely to gleam insights into what types of policies he might pursue once in office. But the emerging articulations of Trump’s vision for the Asia-Pacific contrast strongly with many of Trump’s campaign promises. The result is a potentially dangerous gap in expectations.

Beijing has concluded that Trump’s transactional, businessman predispositions will lead him to be less inclined to inject human rights and values into his policies and dialogue with China. This may be so. But Chinese are also convinced that Trump’s election signals the ushering in of a period of American isolationism in which Washington will retreat from the world, including from Asia, and abandons its allies. This prospect is warmly welcomed in Beijing. Some Chinese scholars have gone a step further even by contemplating strategic opportunities for Beijing in the South China Sea or in their relations with Southeast Asian states as a consequence of American withdrawal. There is an overarching expectation that Trump’s election will mean less strategic pressure on China in the region.

China may be in for a rude awakening. In the last two days, the policy pronunciations that have emerged from Trump’s advisors paint a very different picture of the president-elect’s Asia policy. In an article for FP, Alexander Gray and Navarro liken Trump’s vision for the region to Ronald Reagan’s “peace through strength” strategy, wherein a robust a U.S. military presence in the Pacific, strong support for Taiwan as a “beacon of democracy,” and U.S. alliances as “bedrocks of stability in the region,” are key components. To support such objectives, the advisors suggest Trump will seek to repeal defense sequestration, rebuild the U.S. Navy, and stand up to Chinese aggression in the South China Sea.

Gray and Navarro’s “peace through strength” vision sounds quite different from the expectation of U.S. retrenchment that many Chinese developed over the course of the campaign. Paraphrasing former Singaporean Prime Minister Lee Kuan Yew, the authors of the article assert that U.S. military presence in the Asia-Pacific is essential to promote U.S. liberal values and serves as a critical source of regional stability. They criticize the Obama administration’s weak implementation of the military component of its “pivot” policy, precisely the aspect Beijing perceives as being most hostile to China, and explain that despite Trump’s suggestions that America’s allies were not contributing their fair share to sustain U.S. security commitments, his commitment to U.S. allies was unquestionable.

The potential danger is that Beijing’s expectations about Trump’s China policy — that he will pay less attention to the Asia-Pacific and place less emphasis on U.S. alliance relationships — may not come to fruition. This could result in the relationship beginning on an uneasy or negative footing. Former president George W. Bush, who I worked for on the National Security Council staffs, always operated from a principle of “no surprises,” which he believed was a key stabilizing feature in the relationship with China. In that spirit, the first thing the Trump administration can do to promote a positive and constructive U.S.-China relationship is provide a clear articulation of his China and Asia policy in order to allow countries in the region to set realistic expectations for where and how they will be able to work with the new U.S. administration, and areas where policymakers will need to address and manage differences.

Originally by: Melissa Chan, Zha Daojiong, Andrew Nathan, David Schlesinger, Paul Haenle, Source: Nov 14, 2016, foreignpolicy.com

As tensions between the United States and China rise over security issues in the Asia-Pacific region, some are concerned about the possibility of conflict between the world’s two largest economies. Dennis Wilder, former Senior Director for East Asia on the George W. Bush administration’s National Security Council, has witnessed many high and low points in the U.S.-China relationship over his distinguished four-decade career in the U.S. government. In this podcast with Paul Haenle, Wilder acknowledges the real and difficult challenges facing Beijing and Washington today, but expresses optimism that the two governments can manage their differences and continue to advance relations along a peaceful and constructive path.

Wilder discusses the highlights and lowlights of his China-focused public service career, from joining former President George W. Bush at the 2008 Olympics to dealing with the aftermath of the accidental bombing of the Chinese embassy in Belgrade in 1999. Looking toward the future of the U.S.-China relationship, Wilder explains that his optimism derives in part from a recognition that American and Chinese leaders will have to find ways to work together to address common global challenges if both countries are to achieve their own national objectives. He also notes that the American and Chinese people have many similarities, such as their entrepreneurialism, that could make future cooperation more likely.

Originally by: Paul Haenle, Source: Aug 4th, 2016, China File.

Former White House official on China affairs relocated to Beijing to be founding director of the Carnegie-Tsinghua Centre for Global Policy

PAUL HAENLE, 50, a veteran US diplomat and former White House official on China affairs, relocated to Beijing six years ago to serve as an active broker of China-US ties as the founding director of Carnegie-Tsinghua Centre for Global Policy – the China branch of the renowned foreign policy think tank Carnegie Endowment for International Peace.

He tells CATHERINE WONG of the importance for China and the US to maintain communication – from high-level summits to collaborative research by Chinese and American scholars in his centre all the way to keeping in touch with his family in America by using the Chinese messaging app WeChat.

Why did you move from being director for China, Taiwan, and Mongolian Affairs on the US National Security Council to become a scholar at a leading think tank in China?

As I was leaving the White House, Douglas H. Paal from Carnegie Endowment came and told me about Carnegie’s desire to build a research centre in China by forming a collaborative partnership with Tsinghua University.

What I liked about it was, first of all, I had lived in China twice before and I was excited about moving back there. I also liked the idea of building a centre together with Chinese partners from Tsinghua under a common goal. Thirdly, I get to work on many of the issues I worked on while I was in government, but at a think tank I can impact policy debates from the outside through research and dialogue that aims to help China and the US to find constructive policy options.

What was the idea behind setting up the Carnegie-Tsinghua Centre?

You can’t really be a global think tank if you don’t have a presence in China. In order to deal with today’s global issues, China has to be at the table.

Because of its economic progress in the last three decades, China finds itself to be in a fundamentally different geo-political and geo-economic position. China is a player and has influence. So it was very important for Carnegie to have an active presence in China. It was very important for our Tsinghua partner as well. As China’s foreign policy becomes more active, and as China becomes more engaged in the international community, Tsinghua can now leverage an international network of experts through the Carnegie Endowment’s network of global centres. This helps Chinese experts to better understand international issues, and gives Chinese experts a platform by which to explain Chinese position and perspectives.

How is the centre involved in the foreign-policy making process of the Chinese and US governments?

The platform and research institute we have built at the centre can provide policymakers and senior foreign policy experts in the US and in China with constructive and collaborative policy recommendations and solutions to common challenges on respective foreign policy agendas. When we come together and come up with strong ideas to increase cooperation and reduce tension, our centre and experts have the channels to bring it to both US and Chinese policymakers. And that I think is one of the real strengths of the Carnegie-Tsinghua partnership.

“The platform and research institute we have built at the centre can provide policymakers and senior foreign policy experts in the US and in China with constructive and collaborative policy recommendations and solutions to common challenges on respective foreign policy agendas”

Paul Haenle

How have the suggestions made by the centre been received by the Chinese government?

I have found in my experience over the past six years, government officials, other think tanks, academics, the media and business community in China have all been very receptive to engaging with scholars and experts from the Carnegie-Tsinghua Centre. We request meetings with government officials to clarify and convey ideas and recommendations, but we also receive invitations by government officials to talk to them about issues that we work on, because they are interested in our ideas. I understand that there is a view that Chinese policymakers rely mostly on Chinese government think tanks, but in my experience they have been very open to hearing and exchanging the ideas of Carnegie-Tsinghua scholars.

Have you encountered any difficulties during the first few years?

At the beginning, I imagine there was a lot of suspicion about what Carnegie’s objectives and goals were in China. But over the years we have worked very hard with our Tsinghua partners to develop trust and good relations. We have worked together in both formal and informal settings and achieved a lot in a way which I think has benefited both sides.

What is your view on US-China relations?

In my experience of working in government, both Chinese and US leaders have made developing China-US relations a priority because of how important the relationship is to both countries and to the world. I believe the overall trajectory for the relationship is upward. But when you look at the strategic rivalry in the Asia Pacific, on the issues related to the South China Sea and the East China Sea, these disagreements could run the risk of beginning to define the US-China relationship.

The US-China relationship is the most consequential relationship in the world. If we get the relationship right, we will have a positive impact on the world, if not, it will have negative impact on the world. We feel that what we at the centre are doing in China is important, and that gives us motivation.

What is your view on US-China relations?

In my experience of working in government, both Chinese and US leaders have made developing China-US relations a priority because of how important the relationship is to both countries and to the world. I believe the overall trajectory for the relationship is upward. But when you look at the strategic rivalry in the Asia Pacific, on the issues related to the South China Sea and the East China Sea, these disagreements could run the risk of beginning to define the US-China relationship.

The US-China relationship is the most consequential relationship in the world. If we get the relationship right, we will have a positive impact on the world, if not, it will have negative impact on the world. We feel that what we at the centre are doing in China is important, and that gives us motivation.

“The US-China relationship is the most consequential relationship in the world. If we get the relationship right, we will have a positive impact on the world, if not, it will have negative impact on the world. We feel that what we are doing in China is important, and that gives us motivation”

Paul Haenle

For foreign companies, the thing I would say is that it’s very important for them to understand China’s national priorities and objectives, and make sure that they are aligned with those reform priorities and objectives. They need to make sure they understand clearly what the leadership is trying to accomplish, and to align themselves with the national and local conditions. The companies which are able to do that will be more successful than other firms.

What do you enjoy the most and the least about living and working in China?

What I enjoy the most is the people – friends, I have a great team at Carnegie-Tsinghua – Chinese and international scholars, interns, staff – it was a great environment to work in. What I like the least about living in China is that it means I am 6,000 miles [9,650km] away from my family members. But we actually use WeChat to keep in touch. When we go back to the US, we make them download the WeChat app, and they really like it. It allows us to stay in touch using videos, or voice feature, the text feature. We really like WeChat!

Originally by Catherine Wong, Source: June 25, 2016, South China Morning Post.

CNBC interview with Paul Haenle following President Xi’s state visit to the U.S.

Watch Paul Haenle in his CNBC television interview on September 27, 2015 – “What did Xi Jinping achieve with U.S. visit?” In this interview, Paul Haenle, director at the Carnegie-Tsinghua Center and co-founder of SAGE Worldwide, outlines the political objectives of Chinese President Xi Jinping’s trip to the United States.

In the interview, Haenle highlights how special Xi’s state visit was, especially since it is one of only nine state visits President Obama has hosted during his two terms in office.  A lot of progress was made during Xi’s state visit and President Xi Jinping called the meetings with Obama “fruitful and constructive”.  In addition, President Obama said that the two leaders reached common ground in regards to cyber issues.  Paul Haenle provides a unique insight into the two leaders priorities and objectives during the visit.  For President Xi, it was more about optics and how he was treated in the U.S.  For the U.S., it is more about substance and enhancing cooperation from China on a range of issues that are important.

For the first time in regards to cyber issues, President Xi and the Chinese have recognized and stated he will not tolerate it which he has never said before this visit.  President Obama was somewhat skeptical of Xi’s words, but said he would wait to see if prosecution actions are taken against cyber attacks from China.

Click here to view the original video from CNBC.

Co-authored by: Anne Sherman

As the United States enters a presidential election campaign and prepares for the first state visit of a new Chinese leader, the U.S.-China relationship is at an important inflection point. Nearly four decades after the normalization of relations between our two countries, new realities in China, the United States, and the international community are changing the way Americans and Chinese view their bilateral relationship and forcing a re-examination of the principles that underpin our policies.

The global arena has changed dramatically in recent years. Today there are few challenges that the United States or China could solve alone and few scenarios in which one country could succeed without the success of the other. Whereas only a decade ago our relations were focused primarily on bilateral or even regional issues, today our agenda is global. Each country’s ability to achieve its national objectives is threatened by the same set of international challenges. Our future prosperity and security is increasingly intertwined. The stakes for a cooperative and constructive U.S.-China relationship have never been higher.

At the same time, there are new realities that pull us apart. China is now the world’s second largest economy and has accumulated significant influence on the global stage. Its new leader, President Xi Jinping, has charisma and confidence that have contributed to his ability to consolidate more power and reorient the country in a more ambitious direction than either of China’s previous two leaders were able to during their tenures. But Xi is also more nationalistic, risk-tolerant, and ideological than his predecessors, and his more active and muscular approach to foreign affairs can at times be at odds with U.S. interests and reinforces the notion that what China decides to do with its newfound power may not always align with our national objectives.

In the Asia-Pacific, for example, Xi is pursuing a dual-track strategy that on the one hand employs the ace in China’s deck—economic might—to convince neighbors that China’s continued rise will benefit them, and on the other hand involves a much more aggressive approach to strengthen China’s claims to disputed territorial and maritime features in adjacent waters, often through coercion and without due regard for international law. Both tracks are hugely ambitious—Xi’s One Belt One Road project, for example, aims to connect China to Europe by land routes traversing Russia and the Middle East and sea routes navigating through the Malacca Straits and the Gulf of Aden. Xi’s land reclamation in the South China Sea, meanwhile, has recovered over 2,000 acres in just the last 18 months— more than all other claimants combined and more than in the entire history of the region.

This more active foreign policy represents a major departure from the foreign policy principle of taoguangyanghui that dictated that China should keep a low profile on the international stage and focus on its development efforts at home. Potentially more troubling, however, are the rising frictions in the U.S.-China commercial relationship, exacerbated by accusations of cyber hacking, China’s use of industrial policy, and a slowing Chinese economy. The U.S. business community has historically been an anchor of stability between the two countries, especially during inevitable periods of tension. Yet, growing concerns about protectionist tendencies that seem intended to close the door to foreign companies under the pretext of national security threaten to undermine the support of these reliable stakeholders. Civil society and human rights groups are also concerned with developments in China calling for a ban on Western textbooks, a crackdown on NGOs, and the silencing of dissidents.

Thus, as China has emerged as a formidable economic and geopolitical U.S. competitor, its differences with the United States have become more (not less) pronounced. What many Chinese are now calling China’s renaissance—the nation’s revival at home and abroad—while welcomed by the United States, is different than what many in the West expected. Americans who traditionally believed China’s success was good for the United States are now beginning to question this assumption, and in these doubts, a debate has emerged over whether or not Washington has the right framework to respond to a rising China.

Contours of the U.S. Policy Debate on China

At the core of the U.S. debate are questions about the strategic intentions of a rising China, the long-term sustainability of U.S. primacy in the Asia-Pacific, and the roles of both nations in the region going forward. One side of the extreme argues that growing Chinese power is undermining U.S. leadership in the Asia-Pacific. Without reassurances of sustained U.S. predominance, countries on China’s borders will reorient their defense postures in ways that could lead to an intensified regional arms race and an environment where conflict is more likely. This argument supposes that China’s ultimate aims are not limited to pushing the United States out of Asia, but also include undermining the U.S.-led international system and U.S. global leadership. Thus, the United States should move assertively to block China’s rise.

On the other side of the extreme are those who argue that Beijing’s aims are limited to strengthening its security and enhancing its regional influence, which the United States and its allies should not necessarily see as a threat. Washington should come to terms with the reality that U.S. predominance in the region is unsustainable given China’s growing economic clout and military modernization, and attempting to preserve it would be dangerous and ultimately unsuccessful. In order to avoid conflict, this contingent argues that Washington should share power with China and further assist its integration into the current international order.

Both extremes are flawed and dangerous policy choices. If the United States moves toward a balance of power with China, it will be based on a premature assumption that China’s continued rise to regional predominance is inevitable. China confronts enormous political, economic, and social challenges at home and faces several major powers and nuclear states in the region, not to mention a U.S. military that for the foreseeable future is expected to endure as the strongest in the world. Furthermore, it is not in the interests of the United States or those of its allies to have a G2 with China.

On the other hand, a zero-sum U.S.-China relationship, a divided Asia, and a greater likelihood of military conflicts would be much to the detriment of U.S. interests and those of our allies. A containment policy could lead China to close its doors to cooperation and engagement with the United States. The interests of the U.S. business community, which, despite recent concerns, wants to maintain strong trade ties with China and access to its markets and investment, would be threatened. Additionally, growing Chinese investment in the United States, which is already contributing significantly to U.S. economic growth and job creation, would also be threatened.

A move by the United States to a more confrontational approach with China also ignores the fact that U.S. allies and partners, all now larger trading partners with China than with the United States, are not looking to choose sides between the United States and China. They want good relations with both. While on one hand they hope the United States can serve as a useful counterbalance to China’s growing influence, on the other hand, they want to benefit from increasing trade and investment with China.

Also at risk would be the interests of nearly every other nation with a stake in trying to address our common global challenges from climate change to transnational terrorism. And a policy of blocking China’s rise would further confirm the widespread view in China that the United States is determined to contain it and lend credence to hardliners who want to take an even less accommodating approach toward the United States. Revisions to U.S. policy toward China must account for Beijing’s likely reactions and the second- and third-order consequences.

How to Advance Relations Given New Realities

The success of Washington’s engagement with China starts with an understanding of these new global realities shaping our relations. Rather than moving toward extreme policy courses in the face of these new challenges, the U.S. strategy for advancing bilateral relations with China should begin with a comprehensive approach to the Asia-Pacific region, be founded on strong American domestic fundamentals, and be guided by U.S. leadership globally. The United States needs to get its approach to the region right, get its economy and political system working again, and project leadership and staying power on the regional and international stages. Only then will it be able to lead a much more deliberate effort to work with China where it has common interests, to pursue a more effective strategy to shape Chinese decisionmaking, and to invest adequately in current and future military capabilities.

The U.S. ability to uphold regional rules and norms in the Asia-Pacific, strengthen institutions, lead the building and modernizing of trade and economic architectures, and modernize its strong alliance system is critical to a secure and peaceful region and constructive relations with China. Although a majority of Americans view Asia as the most important region to U.S. interests, many question U.S. political will, staying power, and resources to implement its rebalancing policy in the region. The United States needs to get its economy growing again, get its political system out of gridlock, and keep its military funded and capable of meeting the challenges of the twenty-first century. U.S. national security, global credibility, and regional leadership rest on the foundation of its fiscal and economic health and the effectiveness of its policymakers and legislators.

When it comes to China, the United States should keep in mind several key principles that have guided our mix of competition and cooperation over the past four decades: where the United States and China have common interests, the United States must find ways to work with China; where the two countries have differences, leaders need to manage and narrow them; and given the uncertainties of China’s trajectory, the United States must maintain a hedging strategy and ensure its military is prepared and capable of defending U.S. interests today and in the future. Recently, the United States has struggled with all three major components of its China policy. It has fallen short in its efforts to expand meaningful cooperation with China on addressing shared regional and global challenges. Washington and Beijing have been unable to effectively manage their differences—tensions in the South China Sea and the cyber realm have come to define the bilateral relationship and set it on a path toward confrontation. With few positive narratives or examples of tangible cooperation between our two countries, the military hedging strategies threaten to dominate our front-page news.

As then deputy secretary of state Robert Zoellick stressed in an important speech in 2005, a more cooperative relationship with a China that is a major stakeholder on global security and economic issues will not only make it easier for the United States to handle the wide range of global challenges we face in the years ahead, but is also essential to sustaining the existing, open international system. While cooperation will not mean we will not have serious differences and disagreements that we will need to manage, it will provide a broader framework for constructive engagement. If we can find ways to enhance our cooperation with China and change the narrative of our relationship among our publics by demonstrating that the United States and China can be a positive force in the international community, then this will give us space to deal with some of the more challenging issues in our relationship.

Conclusion: The View From a Wider Lens

While there are challenges in the U.S.-China relationship, Washington cannot lose sight of the fact that this is an important relationship—perhaps the most consequential one for the United States in this century. Whether or not Washington gets this relationship right will determine whether or not the United States is able to take advantage of the Asia-Pacific region’s growth and make progress on addressing critical global challenges in ways that yield benefits to the citizens of both countries, our neighbors, and the world. The U.S.-China relationship has been and will continue to be composed of both cooperation and competition, but because of the new global realities of our relationship, we must do a better job of balancing these two dimensions. If successful, our constructive cooperation will benefit not just our two countries but the entire international community.
Read the original article “New Realities in the U.S.-China Relationship” here.

In recent years, China’s economy has grown at a slower pace, prompting many experts to speculate on its future prospects. In this podcast, Paul Haenle and Carnegie’s Yukon Huang examined and debunked certain misperceptions that inform current conventional wisdom about the debt that China has accumulated and the country’s unbalanced growth.

Huang posited that China’s debt is the result of deliberate government stimulus programs and not fiscal mismanagement. He asserted that rising debt levels suggest that China’s fiscal system will need to evolve to fit the country’s needs as an emerging market. Huang also maintained that unbalanced growth is a necessary step for China to grow from a middle-income country to a high-income one.
Yukon Huang

Yukon Huang is a senior associate in the Carnegie Asia Program. His research focuses on China’s economic development and its impact on Asia and the global economy.
Paul Haenle

Paul Haenle is the director of the Carnegie–Tsinghua Center for Global Policy. Prior to joining Carnegie, he served from June 2007 to June 2009 as the director for China, Taiwan, and Mongolian Affairs on the National Security Council staffs of former president George W. Bush and President Barack Obama.

Originally by Paul Haenle and Yukon Huang, Source: April 7, 2015, Carnegie Endowment for International Peace

BEIJING — China’s state media indulged in a bit of gloating Wednesday, as Europe’s most powerful nations announced they planned to join a Chinese-led Asian regional bank, ignoring objections from the United States.

In a commentary piece titled “Washington, what are you waiting for?” state news agency Xinhua described the United States as “petulant and cynical” for declining to join the Asian Infrastructure Investment Bank (AIIB). It said the bank was open to all nations but said Washington’s “sour grapes” left it looking “isolated and hypocritical.”

On Tuesday, Germany, France and Italy said they planned to join the bank, following Britain’s decision to do so last week.

Officials from Australia and South Korea also have indicated they are considering joining the bank in recent days, after initially declining to do so.

The United States was sharply critical of Britain’s decision last week, with an unnamed administration official telling the Financial Times that it had been made with “virtually no consultation with the U.S.” and accusing London of “constant accommodation” of China.

China proposed the bank in 2013 to finance investment in infrastructure across Asia and had pledged to put up most of its initial $50 billion in capital. Earlier this month, China said 27 nations had signed up to be founding members.

The United States has denied that it lobbied its allies not to join the bank. It says that it welcomes the idea of an infrastructure bank but “strongly urges it meet international standards of governance and transparency.”

Fearing that the AIIB will become a rival to the World Bank, it is worried that its lending programs will not include adequate safeguards over issues such as the environment and labor rights.

But the European decision to break ranks with Washington represents a significant diplomatic setback for the United States.

“The administration has made a major mistake. Not just our refusal to take part in the bank, but the pressure on our allies not to take part, was very short-sighted,” said David Sedney, a senior fellow at the Atlantic Council and former senior State Department official. “I understand the concerns about standards, but being in opposition to it has meant we don’t have the ability to influence it. And it is clearly going to go ahead whether we support it or not.”

Sedney said there was a “strain in U.S. political thinking that says if we are not in the lead role, we should not be part of it — but I think that has been a mistake.”

China’s Foreign Ministry spokesman, Hong Lei, welcomed the Europeans’ decision to join the bank and urged other countries to join. At a regular news conference Wednesday, he said the bank would maintain high standards and learn best practices from other multilateral institutions.

“The AIIB aims to benefit people all around Asia,” he said. “Most countries in Asia are developing countries, which lack money for infrastructure projects.”

But U.S. Treasury Secretary Jack Lew appeared unconvinced, urging countries to think twice before joining.

“I hope before the final commitments are made, anyone who lends their name to this organization will make sure that the governance is appropriate,” he told lawmakers Tuesday, according to Reuters.

The United States enjoys a dominant position in the World Bank and the International Monetary Fund, but European and Asian nations have grown increasingly frustrated with its failure to agree to reforms of voting rights in the IMF that would give China and other emerging nations greater say.

Lew acknowledged that the failure by Congress to agree to a “very mild and reasonable” set of reforms of the IMF had prompted countries to look elsewhere.

Thomas Wright, director of the Project on International Order and Strategy at the Brookings Institution, wrote that the U.S. approach toward the AIIB had been “confused and contradictory,” while Paul Haenle, director of the ­Carnegie-Tsinghua Center in Beijing, said the administration had “played it very badly.”

“We are going to come out looking insecure and weak,” Haenle said. “They probably didn’t give us enough notice, and U.S. concerns about governance are legitimate concerns, but you need to be part of it in order to be able to shape it.”

But Wright also argued that “Britain should not be let off the hook” for a decision solely based on commercial interests rather than a strategic assessment of how to promote stability in East Asia.

Several experts pointed out that the United States had long urged China to take a stronger leadership role in global affairs but then had raised objections when Beijing did just that.

“We are pushing the Chinese to contribute more, to be a responsible stakeholder, to take a greater role where they can in helping resolve problems,” Haenle said. “But in many cases when they do step forward and say, ‘Well, this is what we are going to do,’ our instant knee-jerk reaction is to say, ‘What are you doing here?’ ”

Originally by Simon Denyer, Quoted: Paul Haenle, Source: March 18, 2015, The Washington Post

BEIJING — When Xi Jinping, then the newly minted Chinese leader, first broached the idea of a new Asian development bank in a public speech in 2013, few in Washington paid it much heed.

But as Beijing systematically recruited longtime American allies to help fund and oversee the new bank, it became clear that the push was more than a public relations gesture to China’s Asian neighbors. It was also a direct threat to the post-World War II financial institutions led primarily by the United States, and to President Obama’s pledges to make a “pivot” to Asia in American foreign policy.

Now with Britain, France, Germany and Italy signing up to join the new bank, despite direct pleas from Washington to steer clear, the question is whether the Obama administration mishandled a significant challenge from China, and what it might have done differently.

“The administration made a major mistake in its opposition. It was a very shortsighted,” said Paul Haenle, director of the Carnegie-Tsinghua Center in Beijing. “The bank was going to go ahead whether we supported it or not.”

The United States would have been wiser, he and others said, to temper its resentment of China’s efforts to raise its international profile and play a bigger role in global financial affairs. Some argue it may also have sought to play a role in an Asia-focused bank led by China, just as Washington expects China to contribute more to the World Bank and the International Monetary Fund, the Washington-based lending agencies for development and monetary stability.

The willingness of Britain to join the China bank over American objections was an especially clear sign of China’s sophisticated strategy for winning friends, and Washington’s failure to respond effectively.

The British chancellor, George Osborne, had made clear his desire to change Britain’s attitude toward China. The Chinese knew that he wanted to make London a platform for overseas business transacted in Chinese currency, a first step to the convertibility of the renminbi. Just two weeks after Mr. Xi’s speech on the bank, which the Chinese leader delivered in Indonesia, Mr. Osborne visited Beijing, where the courting began.

The confluence of Chinese and British interests led to Mr. Osborne’s announcement last week that Britain would become a founding member of the bank, the Asian Infrastructure Investment Bank. American opposition was made clear, but most likely came late in the process.

The British decision cleared the way for other European allies that China had courted to go Beijing’s way, as well. Australia is expected to sign up in the next week, according to government officials, and South Korea is likely to follow.

Speaking of Britain, an angry senior administration official told The Financial Times that the decision to join the bank was one more sign of “constant accommodation” of China.

One problem is that Washington did not offer much of an alternative to China’s call to inject far more funding into building roads, railroads and pipelines around Asia, much of which remains underdeveloped. There is little dispute, Mr. Haenle said, that the World Bank and the Asian Development Bank have been unable to fulfill the infrastructure needs in the region.

“But there is a strain in Washington that if the U.S. is not in the lead, then the U.S. should not be part of it,” he said.

Early on, the United States should have realized that China was determined to create the bank, and that Washington should have tried to influence its creation rather than block it, analysts in Washington and Asia said.

China was upset that after the 2008 financial crisis, Congress rebuffed legislation intended to increase Beijing’s voice in the World Bank and the International Monetary Fund. Now that China was sitting on more than $3 trillion in foreign exchange reserves, Beijing could easily afford to finance an entirely new institution that would have a majority Chinese stake with other countries as minority shareholders, they said.

Moreover, China had decided that it wanted to use its excess capacity in steel, concrete and pipes to build up neighboring economies and benefit the Chinese economy, said Laurence J. Brahm, an American who worked with Prime Minister Zhu Rongji on China’s entry to the World Trade Organization in 2001.

“China’s economy will benefit from the export of its own labor to build the infrastructure in the region,” he said.

That China would use the bank for its own pet projects in Asia and try to knit together the poorer countries of Southeast and Central Asia into an economic sphere of influence was one of the main worries in Washington.

Even so, the administration could have adopted a positive approach. It had the option of agreeing that investing in infrastructure was needed in Asia, and that China, flush with cash, had the ability to fill the gap, said Matthew Goodman, senior adviser on Asian economics at the Center for Strategic and International Studies.

From that more supportive position, Washington would have been in a better position to try to shape the new bank’s rules on lending, the environment and transparency, he said.

China’s Finance Ministry has told prospective members that it will strive to make the new bank a first-class operation that will manage to deliver projects more efficiently than the World Bank or the Asian Development Bank.

To that end, the Chinese have asked a lawyer who worked at the World Bank for over 30 years, Natalie Lichtenstein, to help prepare the bank’s charter. Such people are important to the bank’s success, said Fred Hu, the founder of Primavera Capital, a private equity firm in Beijing, who early in his career worked at the World Bank.

“The last thing China and A.I.I.B. needs is that some of the fears expressed by Washington are validated,” he said. “Attracting world-class talent is absolutely crucial.”

And mindful of reputation, the Finance Ministry has deflected an interest in bank membership from Iran, saying it might consider Iran in a second round, but not as a founding member.

No matter how the bank shaped up, it was highly unlikely that the United States would be a member. That was an unfortunate situation, said an Asian diplomat whose country is a founding member.

“The truth is no one in the region wants to choose between the United States and China,” he said. But Washington’s hostility to the bank, he said, made countries choose in China’s favor.

Originally by Jane Perlez, Quoted: Paul Haenle, Source: March 19, 2015, The New York Times