China's Domestic Politicsand

China’s Domestic Politics and Foreign Policies and Major Countries’ Strategies toward China edited by Jung-Ho Bae and Jae H. Ku China’s Domestic Politics and Foreign Policies and Major Countries’ Strategies toward China 1SJOUFE %FDFNCFS 1VCMJTIFE %FDFNCFS 1VCMJTIFECZ ,PSFB*OTUJUVUFGPS/BUJPOBM6OJGJDBUJPO ,*/6 1VCMJTIFS 1SFTJEFOUPG,*/6 &EJUFECZ $FOUFSGPS6OJGJDBUJPO1PMJDZ4UVEJFT ,*/6 3FHJTUSBUJPO/VNCFS /P "EESFTT SP 4VZVEPOH (BOHCVLHV 4FPVM 5FMFQIPOF 'BY )PNFQBHF IUUQXXXLJOVPSLS %FTJHOBOE1SJOU )ZVOEBJ"SUDPN$P -UE $PQZSJHIU ,*/6 *4#/ 1SJDF G "MM,*/6QVCMJDBUJPOTBSFBWBJMBCMFGPSQVSDIBTFBUBMMNBKPS CPPLTUPSFTJO,PSFB "MTPBWBJMBCMFBU(PWFSONFOU1SJOUJOH0GGJDF4BMFT$FOUFS4UPSF 0GGJDF China’s Domestic Politics and Foreign Policies and Major Countries’ Strategies toward China �G 1SFGBDF Jung-Ho Bae (Director of the Center for Unification Policy Studies at Korea Institute for National Unification) �G *OUSPEVDUJPO 1 Turning Points for China and the Korean Peninsula Jung-Ho Bae and Dongsoo Kim (Korea Institute for National Unification) �G 1BSUEvaluation of China’s Domestic Politics and Leadership $IBQUFS 19 A Chinese Model for National Development Yong Shik Choo (Chung-Ang University) $IBQUFS 55 Leadership Transition in China - from Strongman Politics to Incremental Institutionalization Yi Edward Yang (James Madison University) $IBQUFS 81 Actors and Factors - China’s Challenges in the Crucial Next Five Years Christopher M. Clarke (U.S. State Department’s Bureau of Intelligence and Research-INR) China’s Domestic Politics and Foreign Policies and Major Countries’ Strategies toward China $IBQUFS 123 China’s Ethnic Minorities and Reform Carla P. Freeman (SAIS, Johns Hopkins University) �G 1BSUChina’s Foreign Relations and its Policies toward Major Countries $IBQUFS 155 Resisting, Reducing, and Replacing - China’s Strategy and Policy towards the United States Fei-Ling Wang (Georgia Institute of Technology & Minerva Fellow, United States Air Force Academy) $IBQUFS 187 China’s Japan Policy - Managing the Islands Dispute in a Transitional Era Yongtao Gui (Peking University) $IBQUFS 213 China’s Dilemma and its Policies toward North Korea in the Kim Jong-un Era - Maintaining the Status Quo while Managing a Difficult North Korea Ki-Hyun Lee (Korea Institute for National Unification) $IBQUFS 251 The Uneasiness of Big Brother-Little Brother Relationships - China’s Relations with Neighboring Vietnam, Laos, Cambodia, Mongolia, and Myanmar Jae H. Ku and Wonhee Lee (SAIS, John Hopkins University) $IBQUFS 277 The North Korean Nuclear Issue and China’s Strategy Seongwhun Cheon (Korea Institute for National Unification) $IBQUFS 311 One Strategy, Three Pillars - China’s Attempt to Secure Global Energy Resources Bo Kong (SAIS, Johns Hopkins University) �G 1BSUMajor Countries’ Policies and Strategies toward China $IBQUFS 339 U.S. Policy and Strategy toward China Michael S. Chase (U.S. Naval War College) $IBQUFS 365 Understanding Japan’s Strategy toward China Yasuhiro Matsuda (University of Tokyo) China’s Domestic Politics and Foreign Policies and Major Countries’ Strategies toward China $IBQUFS 393 Russia’s Policy toward China Viacheslav Amirov (IMEMO- Russia) $IBQUFS 421 Australia’s Strategy toward China Linda Jakobson (Lowy Institute for International Policy) $IBQUFS 455 Taiwan’s Strategy on New Directions of Cross-strait Relations Fu-Kuo Liu (National Chengchi University) $IBQUFS 477 India’s Strategy toward China Surjit Mansingh (American University) $IBQUFS 503 China’s Rise and the Korean Peninsula - A Convergence of Interests for South Korea and Australia? Andrew O’Neil (Griffith University) $POUSJCVUPST 527 Preface Since China emerged as the second economically strongest power in the world, the international community has paid in- creasingly more attention to it. China’s rise as a G2 power as part of a transition of global power and the potential future of the Chinese economy have been of particular interest. The changing nature of U.S.-China relations and the strategic environment of East Asia during this transition of global power has become a top- ic of high interest for Korea as well. This is a crucial time to accurately analyze and evaluate the present and future of China. There is no value in underestimating or overestimating China’s prospects. Since South Korea must co- operate strategically and wisely with China to deal with a changing North Korea while at the same time preparing for unification of the Korean Peninsula, accurate analysis and understanding of the reality of China’s power—Chinese leadership and political economy, and its foreign policy and strategy towards North Korea —is necessary. Given these strategic issues, this study intends to discuss and analyze China’s political economy and leadership, foreign policy and relations, and major countries’ (the U.S., Japan, Russia, India, and Australia) policies toward China as part of a joint research project with experts abroad. This study is deeply indebted to a few individuals for their precious advice and cooperation in assembling this volume: Dr. Jae H. Ku at the U.S.-Korea Institute at SAIS, Johns Hopkins University, and Dr. Yong Shik Choo at the Graduate School of International Studies, Chung-Ang University. Also a special thanks to Mimi Ahn, who devoted several months of her time throughout the entire process of publication. As the editor of this volume, it is my hope that this research helps academics and experts as well as general audiences to better understand the implications of China’s rise to its region and the world. Jung-Ho Bae (Director of the Center for Unification Policy Studies) Introduction Turning Points for China and the Korean Peninsula Jung-Ho Bae and Dongsoo Kim 2 Introduction China at a Turning Point Since the 1980s, China has accomplished rapid economic growth and has earned the nickname “the world’s factory,” reflect- ing the development that occurred as a result of reforms and the es- tablishment of an open-door policy in 1978. Since then, China has maintained 30 years of rapid economic growth, around 9.9% per year, and has emerged as the world’s second most powerful economy, based on GDP in 2010, overtaking Japan. Because of this, a considerable number of experts predict that China’s GDP will sur- pass that of the United States by 2020. The likelihood of this pre- diction coming true increases greatly when calculated in terms of PPP, which represents China’s standard of living. Those who are optimistic about China’s economic growth base their expectations on the Chinese Communist Party’s cri- sis-coping ability and state-dominated market economic system, the country’s extremely low financial deficit rate and huge foreign exchange reserves, numerous signs pointing to a possible transition from an export-led market to a domestic market design, con- tinued rural migration to urban secondary and tertiary industries and an acceleration of urbanization, and the transition from la- bor-intensive to capital and technology-intensive industry. Meanwhile, some are more cautious and pessimistic saying that China’s consistently rapid growth has reached its limit due to changes in the international economic environment and in light of China’s internal problems. In reality, limits on Chinese economic growth potential have been due in part to economic troubles in China’s major export markets, such as the financial crises in the United States and throughout Europe, and the effects that inflation Jung-Ho Bae and Dongsoo Kim 3 in wages have had on industries that rely on low wages. Moreover, difficulty in collecting accumulated loans and financial weakness from excessive investment in state and private enterprises may also negatively affect China’s economy. Weak socioeconomic factors also threaten China’s economic growth potential, including a rapidly aging society, a reduced economically-active population, an ap- proximately 150 million surplus population in agriculture, wor- sening distribution problems, a widening gap between the rich and the poor, serious corruption, and a developmental gap between in- land and coastal regions. Therefore, future development of the Chinese economy de- pends on how China overcomes such socioeconomic issues despite being affected by the U.S. and EU financial crises. This also implies that the Chinese economy has arrived at a juncture of either sustained growth or recession. Furthermore, China’s stable economic growth in the future is not just tied to its national power, but to its socioeconomic issues as well, which shows that it has come to a turning point overall. In sum, China is faced with transition on international political, socioeconomic, and domestic political levels. First, the international community has entered a time in which the global power structure is changing. While the power and influence of China ris- es, economic recession has left the United States relatively weak. U.S.-China containment and cooperative relations have caused a global power shift and major strategic changes are taking place throughout Northeast Asia. Second, China’s economic power is at a juncture of either sustained growth or recession due to international economic currents and domestic socioeconomic issues. This may considerably affect China’s national power, not to mention the survival of the Communist Party. Third, new leadership emerged 4 Introduction during the 18th party convention in 2012. Newly aspiring 5th generation leadership consists of officials born after 1949. This change in leadership from the 4th to the 5th generation

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