Friend or foe? A special report on China’s place in the world December 4th 2010

ChinaCOV.indd 1 23/11/2010 15:55 The Economist December 4th 2010 A special report on China’s place in the world 1

Brushwood and gall Also in this section The fourth modernisation China is becoming a military force to reckon with in the western Paci†c. How should America respond? Page 4

Less biding and hiding China is becoming more nationalistic and more assertive. How will other countries react? Page 6

In the balance Their wealth depends on China, their security on America. Which way should Asian countries face? Page 9

Friends, or else Living with China’s rise will test America’s diplomacy as never before. Page 11 China insists that its growing military and diplomatic clout pose no Strategic reassurance threat. The rest of the world, and particularly America, is not so sure, Many things could worsen relations between says Edward Carr China and America. Here are ten ways to N 492BC, at the end of the ŒSpring and years of colonial humiliation. make them better. Page 13 IAutumn period in Chinese history, Taken like that, the parable of Goujian Goujian, the king of Yue in modern Zhe• sums up what some people †nd alarming jiang, was taken prisoner after a disastrous about China’s rise as a superpower today. campaign against King Fuchai, his neigh• Ever since Deng Xiaoping set about re• bour to the north. Goujian was put to work forming the economy in 1978, China has in the royal stables where he bore his cap• talked peace. Still militarily and economi• tivity with such dignity that he gradually cally too weak to challenge America, it has won Fuchai’s respect. After a few years Fu• concentrated on getting richer. Even as Chi• chai let him return home as his vassal. na has grown in power and rebuilt its Goujian never forgot his humiliation. armed forces, the West and Japan have run He slept on brushwood and hung a gall up debts and sold it their technology. Chi• bladder in his room, licking it daily to feed na has been patient, but the day when it his appetite for revenge. Yue appeared loy• can once again start to impose its will is al, but its gifts of craftsmen and timber drawing near. tempted Fuchai to build palaces and tow• However, Goujian’s story has another ers even though the extravagance en• reading, too. Paul Cohen, a Harvard schol• snared him in debt. Goujian distracted him ar who has written about the king, ex• with Yue’s most beautiful women, bribed plains that the Chinese today see him as an his oˆcials and bought enough grain to example of perseverance and dedication. empty his granaries. Meanwhile, as Fu• Students are told that if they want to suc• Acknowledgments chai’s kingdom declined, Yue grew rich ceed they must be like King Goujian, sleep• Many people helped with this special report. The author and raised a new army. ing on brushwood and tasting gall‹that would especially like to mention: Rob Ayson, Chen Zhimin, Jae Ho Chung, Malcolm Cook, Admiral William Fallon, Kim Goujian bided his time for eight long great accomplishments come only with Fam, Andrew Ferrier, Charles Finny, Charles Freeman, Paul years. By 482BC, con†dent of his superior• sacri†ce and unyielding purpose. This Gebhard, Richard Grant, Andrew Krepinevich, Michael ity, he set o north with almost 50,000 Goujian represents self•improvement and L’Estrange, Ma Jiali, Jim McGinlay, Russell Moses, ŒCraggy Ridge, Admiral Gary Roughead, David warriors. Over several campaigns they put dedication, not revenge. Shambaugh, Robert Sutter, Hitoshi Tanaka, Tomohiko Fuchai and his kingdom to the sword. Which Goujian will 21st•century China Taniguchi, Jitsuro Terashima, William Tow, General The king who slept on brushwood and follow? Will it broadly †t in with the West• Noboru Yamaguchi and Zhu Feng. tasted gall is as familiar to Chinese as King ern world, as a place where people want A list of sources is at Alfred and his cakes are to Britons, or nothing more than a chance to succeed Economist.com/specialreports George Washington and the cherry tree are and enjoy the rewards of their hard work? to Americans. In the early 20th century he Or, as its wealth and power begin to over• An audio interview with the author is at became a symbol of resistance against the shadow all but the United States, will Chi• Economist.com/audiovideo/specialreports treaty ports, foreign concessions and the na become a threat‹an angry country set 1 2 A special report on China’s place in the world The Economist December 4th 2010

2 on avenging past wrongs and forcing oth• ers to bend to its will? China’s choice of role, says Jim Steinberg, America’s deputy secretary of state, is Œthe great question of our time. The peace and prosperity of the world depends on which path it takes. Some people argue that China is now too enmeshed in globalisation to put the world economy in jeopardy through war or coercion. Trade has brought prosperity. China buys raw materials and compo• nents from abroad and sells its wares in foreign markets. It holds $2.6 trillion of for• eign•exchange reserves. Why should it pull down the system that has served it so well? But that is too sanguine. In the past inte• gration has sometimes gone before con‡a• gration. Europe went up in ‡ames in 1914 even though Germany was Britain’s sec• ond•largest export market and Britain was Germany’s largest. Japan got rich and fell in with the European powers before it bru• tally set about colonising Asia. Others go to the opposite extreme, argu• empires. The insight of Œpower•transition dealing with China. American companies ing that China and America are con• theory is that satis†ed powers, such as enjoyed decent access to Chinese markets. demned to be enemies. Ever since Sparta post•war Germany and Japan, do not chal• China lent the American government huge led the Peloponnesian League against Ath• lenge the world order when they rise. But amounts of money. ens, they say, declining powers have failed dissatis†ed ones, such as pre•war Ger• This suited China, which concluded to give way fast enough to satisfy rising many and Japan, conclude that the system long ago that the best way to build its powers. As China’s economic and military shaped and maintained by the incumbent Œcomprehensive national power was strength increase, so will its sense of enti• powers is rigged against them. In the anar• through economic growth. According to its tlement and its ambition. In the end pa• chic arena of geopolitics they believe that analysis, articulated in a series of white pa• tience will run out, because America will they will be denied what is rightfully theirs pers and speeches in the late 1990s and ear• not willingly surrender leadership. unless they enforce their claim. ly 2000s, the country needed a ŒNew Secu• So for most of the past decade the two rity Concept. Growth demanded stability, Reasons for optimism great powers edged towards what David which in turn required that China’s neigh• But that is too bleak. China clings to its ter• Lampton, a professor at Johns Hopkins bours did not feel threatened. ritorial claims‹over Taiwan, the South School of Advanced International Studies, To reassure them, China started to join China Sea, various islands and with India. calls a double wager. China would broadly the international organisations it had once Yet, unlike the great powers before 1945, fall in with America’s post•war order, bet• shunned. As well as earning it credentials China is not looking for new colonies. And ting that the rest of the world, eager for Chi• as a good citizen, this was also a safe way to unlike the Soviet Union, China does not na’s help and its markets, would allow it to counter American in‡uence. China led the have an ideology to export. In fact, Ameri• grow richer and more powerful. America six•party talks designed to curb North Ko• ca’s liberal idealism is far more potent than would not seek to prevent this rise, betting rea’s nuclear programme. The government token Communism, warmed•up Confu• that prosperity would eventually turn Chi• signed the Comprehensive Test•Ban Treaty cianism or anything else that China has to na into one of the system’s supporters‹a and by and large stopped proliferating o er. When two countries have nuclear Œresponsible stakeholder in the language weapons (though proliferation by rogue weapons, a war may not be worth †ghting. of Robert Zoellick, a deputy secretary of Chinese companies continued). It sent In the real world the dealings between state under George Bush junior and now people on UN peacekeeping operations, rising and declining powers are not president of the World Bank. supplying more of them than any other straightforward. Twice Britain feared that For much of the past decade, barring permanent member of the security coun• continental Europe would be dominated the odd ti , the wager worked. Before 2001 cil or any NATO country. by an expansionary Germany and twice it China and America fell out over Taiwan, Inevitably, there were still disputes and went to war. Yet when America took world the American bombing of China’s embas• di erences. But diplomats, policymakers leadership from Britain, the two remained sy in Belgrade and a fatal mid•air collision and academics allowed themselves to be• constant allies. After the second world war between an American EP3 spy plane and a lieve that, in the nuclear age, China might Japan and Germany rose from the ashes to Chinese †ghter. Many commentators back just emerge peacefully as a new super• become the world’s second• and third•larg• then thought that America and China power. However, that con†dence has re• est economies, without a whisper of a po• were on a dangerous course, but Chinese cently softened. In the past few months litical challenge to the United States. and American leaders did not pursue it. China has fallen out with Japan over a †sh• International•relations theorists have Since then America has been busy with ing boat that rammed at least one if not devoted much thought to the passing of the war on terror and has sought plain two Japanese coastguard vessels o what 1 The Economist December 4th 2010 A special report on China’s place in the world 3

2 the Japanese call the Senkaku Islands and for signs that China is going to welsh on the for the time being that remains almost un• the Chinese the Diaoyu Islands. deal and turn aggressive‹and China is thinkable, if only because it would be so Earlier, China failed to back South Ko• looking for signs that America and its allies greatly to everyone’s disadvantage. The rea over the sinking of a Korean navy cor• are going to gang up to stop its rise. Every• danger is that the leaders of China and vette with the loss of 46 crew‹even thing is coloured by that strategic mistrust. America will over the next decade lay the though an international panel had con• Peering through this lens, China•watch• foundations for a deep antagonism. This is cluded that the Cheonan was attacked by a ers detect a shift. ŒThe smiling diplomacy best described by Henry Kissinger. North Korean submarine. When America is over, says Richard Armitage, deputy and South Korea reacted to the sinking by secretary of state under George Bush. ŒChi• The dark side planning joint exercises in the Yellow Sea, na’s aspiration for power is very obvious, Under Richard Nixon, Mr Kissinger created China objected and got one of them says Yukio Okamoto, a Japanese security the conditions for 40 years of peace in Asia moved eastward, to the Sea of Japan. And expert. Diplomats, talking on condition of by seeing that America and China could when North Korea shelled a South Korean anonymity, speak of underlying suspi• gain more from working together than island last month, China was characteristi• cions and anxiety in their dealings with from competing. Today Mr Kissinger is cally reluctant to condemn it. China. Although day•to•day traˆc be• worried. Speaking in September at a meet• China has also begun to include territo• tween American and Chinese government ing of the International Institute for Strate• rial claims over large parts of the South departments ‡ows smoothly, Œthe strategic gic Studies, he observed that bringing Chi• China Sea among its six Œprimary con• mistrust between China and the US con• na into the global order would be even cerns‹new language that has alarmed tinues to deepen, says Bonnie Glaser of harder than bringing in Germany had diplomats. When members of the Associa• the Centre for Strategic and International been a century ago. tion of South•East Asian Nations (ASEAN) Studies in Washington, DC. ŒIt is not an issue of integrating a Euro• complained about this in a meeting in Ha• There is nothing inevitable about this pean•style nation•state, but a full•‡edged noi in the summer, China’s foreign minis• deterioration. Peace still makes sense. Chi• continental power, he said. ŒThe DNA of ter, Yang Jiechi, worked himself into a rage: na faces huge problems at home. It bene†ts both [America and China] could generate a ŒAll of you remember how much of your from American markets and good rela• growing adversarial relationship, much as economic prosperity depends on us, he tions with its neighbours, just as it did in Germany and Britain drifted from friend• reportedly spat back. 2001. The Chinese Communist Party and ship to confrontationðNeither Washing• Last year a vicious editorial in China’s the occupant of the White House, of any ton nor Beijing has much practice in co•op• People’s Daily attacked India after its prime political stripe, have more to gain from eco• erative relations with equals. Yet their minister, Manmohan Singh, visited disput• nomic growth than from anything else. leaders have no more important task than ed territory near Tibet; Barack Obama was China’s leaders understand this. In No• to implement the truths that neither coun• shabbily treated, †rst on a visit to Beijing vember 2003 and February 2004 the Polit• try will ever be able to dominate the other, and later at the climate•change talks in Co• buro held special sessions on the rise and and that con‡ict between them would ex• penhagen, where a junior Chinese oˆcial fall of nations since the 15th century. Amer• haust their societies and undermine the wagged his †nger at the leader of the free ican policymakers are no less aware that, prospects of world peace. world; Chinese vessels have repeatedly though a powerful China will be hard to Nowhere is the incipient rivalry sharp• harassed American and Japanese naval cope with, a dissatis†ed and powerful Chi• er than between America’s armed forces ships, including the USS John S. McCain na would be impossible. and their rapidly modernising Chinese and a survey vessel, the USNS Impeccable. Now, however, many factors, on many counterparts. Globally, American arms re• Such things are perhaps small in them• sides, from domestic politics to the fallout main vastly superior. But in China’s coastal selves, but they matter because of that from the †nancial crisis, are conspiring to waters they would no longer confer such double bet. America is constantly looking make relations worse. The risk is not war‹ an easy victory. 7 4 A special report on China’s place in the world The Economist December 4th 2010

The fourth modernisation

China is becoming a military force to reckon with in the western Paci†c. How should America respond?

HIRTY•FIVE years ago Deng Xiaoping Taccused the People’s Liberation Army (PLA) of Œbloating, laxity, conceit, extrava• gance and inertia. Even so, three years lat• er, when he set about modernising China, he put the PLA last in the queue, behind farming, industry and science. And when the commander of the navy in 1982 laid out his plans for China to become a world sea power, he did not expect his goal to be real• ised before 2040. Later military modernisation became more of a priority, thanks to two demon• strations of American †repower. First, America’s use of precision weapons in Op• eration Desert Storm during the †rst Gulf war convinced China that it could no lon• ger base its defence on the weight of num• bers. Second, when the PLA was hectoring Taiwan with missile tests in 1996, President Bill Clinton ordered two aircraft•carrier strike groups into the region, one of them headed by the provocatively named USS Independence. China had to back down. the world’s †rst anti•ship ballistic missile, drones and underwater•sensor arrays. The collapse of the Soviet Union had †tted with a manoeuvrable re•entry vehi• China has also been working on anti• persuaded China’s leaders that an arms cle for added menace. satellite weapons. American satellites race with the world’s only superpower Second, China has transformed and en• have been Œdazzled by lasers †red from could squander enough money to pose a larged its submarine ‡eet, which can now the ground. And in 2007 a ballistic missile threat to the party’s grip. To challenge berth in the newly completed base on Hai• launched from Xichang space centre in Si• America head on made no sense. Instead nan Island, just o China’s southern coast. chuan blew up a broken weather satel• China put its e orts into a ordable Œasym• In the eight years to 2002 China bought 12 lite‹no mean feat, though other countries metric weapons. Russian Kilo•class submarines, a big im• were furious because it produced more This unorthodox strategy has made the provement on its own noisy Ming• and Ro• than 35,000 new pieces of space debris. PLA’s progress harder to measure. Western meo•class boats. Since then the PLA navy Chinese hackers have been busy, too. In opinion is deeply divided. Military an• has been introducing longer•range and March last year Canadian researchers dis• alysts are alarmed at what they see as a stealthier Chinese designs, including the covered a spy network containing more growing threat to American maritime su• nuclear•powered Jin class, which carries than 1,300 computers, many of them in premacy in the western Paci†c. China se• ballistic missiles, and the Shang class, a nu• China, that had got into governments’ sys• curity specialists tend to sco at all the clear•powered attack submarine. China tems. Taiwanese and Western targets suf• scaremongering. Who is right? has about 66 submarines against Ameri• fered from severe Chinese cyber•attacks at Three areas of the PLA’s modernisation ca’s 71, though the American boats are su• least 35 times in the decade to 2009, accord• stand out. First, China has created what the perior. By 2030, according to the Kokoda ing to Northrop Grumman, an American Pentagon calls Œthe most active land•based Foundation, an Australian think•tank, Chi• defence contractor. The Pentagon con• ballistic• and cruise•missile programme in na could have 85•100 submarines. cedes that it is not sure the PLA was behind the world. The Second Artillery has about And third, China has concentrated on such attacks, but argues that Œauthorita• 1,100 short•range ballistic missiles facing what it calls Œinformatisation, a tongue• tive analysts in the PLA see cyber•warfare Taiwan and has been extending their range twister that Jiang Zemin coined in 2002 to as important. and improving their accuracy and pay• describe how the PLA needs to function as load. The Second Artillery is also improv• one force, using sensors, communications The new arsenal ing its medium•range ballistic missiles, and electronic and cyber•warfare. China What does this amount to? Military ex• able to carry either conventional or nuc• now has a good idea of what is going on far perts in America, Australia and Japan lear warheads. The PLA has deployed sev• into the Paci†c, thanks to a combination of think China’s new arsenals are a greater eral hundred air• and land•launched long• satellites, over•the•horizon radar, medium• threat than its higher•pro†le plans to range cruise missiles. And it is developing range surface•wave radars, reconnaissance launch aircraft•carriers in the next decade 1 The Economist December 4th 2010 A special report on China’s place in the world 5

2 or so. Alan Dupont, of the University of should strengthen its bases and be able to harder from here. Sydney in Australia, says that Œmissiles disrupt Chinese attacks with decoys and Some have doubts about China’s man• and cyber•equivalents are becoming the by spreading aircraft and ships around the power, too. The PLA is much more profes• weapons of choice for the conventionally region. American forces must have better sional now than when it was a peasant outgunned. logistics and be able to †ght even when army, but it lacks experience. Nigel Inkster, According to the Centre for Strategic their information networks are impaired. of the International Institute for Strategic and Budgetary Assessments (CsBA), an Crucially, they must be in a position to dis• Studies (IISS), recalls one of the founders American research institute, Chinese †re• able China’s electronic reconnaissance, of the Chinese navy once telling him: ŒIt’s power threatens America’s Asian bases, surveillance and battle•damage assess• not that I didn’t know much about sailing, which until now have been safe from all ment, some of which is protected by a sys• but I hadn’t ever seen the sea. but nuclear attack. The Second Artillery’s tem of tunnels beyond easy reach of Complex subjects like submarine war• missiles could swamp the bases’ defences American weapons. fare take years to master. ŒIf you †ght, there and destroy runways as well as large num• are holes, says the IISS’s Christian Le bers of †ghters and ships. Japan is already Paci†c in name only Mière. ŒAnd until you do, you don’t know within range of Chinese missiles, many of Critics say the cold warriors are su ering where they are. The retired admiral thinks them currently pointing at Taiwan. Guam from a bad case of Œenemy•deprivation Chinese forces su er from a lack of trust, soon will be (see chart 1, previous page). syndrome. For a start, the impression that which could slow them up in battle. ŒWe China’s submarines, missiles and anti• China’s defence spending has soared is give our people responsibility and initia• ship cruise missiles threaten America’s air• misleading. The PLA’s budget has broadly tive, he says. ŒThat’s anathema to them. craft•carrier strike groups within 1,000 to kept pace with GDP in the past decade, Robert Ross, a professor at Harvard, ar• 1,600 nautical miles of the Chinese coast. after two decades in which its share of gues that the pessimists overestimate Chi• According to Ross Babbage, an Australian GDP fell (see chart 2). Experts di er about na’s threat and underestimate America’s defence analyst and founder of the Ko• the size of China’s defence budget, which powers. The United States is better able to koda Foundation, if China had an anti• is only partly disclosed. Sam Perlo•Free• track the other side’s submarines; it is su• ship ballistic missile, coming in fast and man, of the Stockholm International Peace perior in cyber•warfare and less vulner• without much warning, it would be even Research Institute, puts overall spending in able than China in space‹if only because harder to defend against. And China’s 2009 at $99 billion in 2008 dollars, though it has built•in redundancy. China would space and cyber•weapons could serve as some estimates are higher and the oˆcial struggle to penetrate the countermeasures what Chinese planners label an Œassas• total is only $70 billion. The United States and electronic camou‡age that protect sin’s mace in a surprise attack designed to is planning to spend $663 billion. As a American ships. Carlyle Thayer, of the smash America’s elaborate but fragile elec• share of GDP, China spends less than half Australian Defence Force Academy, notes tronic networks. That would leave Ameri• the American †gure and less than it did at that it has already deployed 31of its 53 fast• can forces half•blind and mute, and its the start of the 1990s. ŒThere is not much attack submarines and three Ohio class bases and carriers more vulnerable still. evidence of an arms race, says Mr Perlo• nuclear submarines to the Paci†c. In sum, China’s abilities to strike have Freeman. For all the uncertainties in this debate, soared far beyond seeking to deter Ameri• Some doubt the quality of China’s three things are beyond dispute. First, Chi• can intervention in any future mainland equipment. One retired American admiral na has already forced American ships to dispute with Taiwan. Today China can pro• says that much of the Russian equipment it think about how and when they approach ject power out from its coastline well be• bought was Œjunk. Despite China’s pro• the Chinese coast. The closer American yond the 12•mile (19km) limit that the gress, it lags in guidance and control, tur• vessels come, the more missiles and sub• Americans once approached without a bine engines, machine tools, diagnostic marines they face and the less time they second thought. Mr Okamoto, the Japa• and forensic equipment and computer• would have to react to a strike. Anyone nese security expert, believes China’s strat• aided design and manufacturing. ŒChina sailing a carrier worth $15 billion•20 billion egy is to have Œcomplete control of what has come a long way fast, says Professor with a crew of 6,000 would think twice planners call the First Island Chain. Ulti• Dupont, Œbut military modernisation gets about taking on that extra risk. To deny 1 mately, China seems to want to stop the American ‡eet from being able to secure its interests in the western Paci†c. A question of perspective 2 America’s most senior oˆcials have Military spending taken note. Last year Robert Gates, the de• 2008 $, 1990=100 Total spending, 2009, $bn % of GDP fence secretary, gave warning that Œinvest• 600 6 ments [of countries like China] in cyber• China* 99 United States and anti•satellite warfare, anti•air and anti• 500 5 ship weaponry and ballistic missiles could 400 4 threaten America’s primary way to project 300 3 power and help allies in the Paci†c‹in par• China* ticular our forward air bases and carrier 200 2 Japan 663 strike groups. 100 1 47 Japan Mr Babbage is blunter: ŒCurrent de• United States fence planning is invalid, he says. He and 0 0 1990 95 2000 05 09 1990 95 2000 05 08 the analysts at CSBA argue that America Source: SIPRI *Estimates needs to rethink its strategy in the Paci†c. It 6 A special report on China’s place in the world The Economist December 4th 2010

2 America possession of seas it has domin• tary spending in Asia is overshadowed by That logic works in China, too. America ated for decades, China does not need to the need to cut overall government spend• has not been shy of going to war in recent control its own coastal waters; it just has to ing and by other military priorities, such as years. Not long ago a retired Chinese admi• be able to threaten American ships there. Afghanistan. Jonathan Pollack, of the ral likened the American navy to a man Hugh White, a former Australian security Brookings Institution, points out that some with a criminal record Œwandering just and defence oˆcial, foresees the western ideas, such as replacing aircraft•carriers outside the gate of a family home. Ameri• Paci†c becoming a Œnaval no•go zone. with more submarines, would inevitably can strength in the 1990s made China feel Second, China’s ability to project pow• run into opposition from the navy and insecure, so it transformed the PLA to shore er is improving. Its submarines, missiles, from politicians whose constituencies up its policy on Taiwan and protect its eco• and cyber• and electronic warfare, once would su er. ŒFor many oˆcers the navy’s nomically vital coastline. Yet by adding to poor, now pose a threat. Its J10 would be a core institutional identity is indelibly tied its own security, China has taken away match for Israel’s fast jet. China’s weapons to carriers and the power•projection mis• from that of its neighbours and of the Un• will continue to improve, and its forces sion they perform, he says. ŒReducing ited States. Perhaps China does not mean will gather experience. Provided that the their numbers is going to be a very painful ever to use its weapons aggressively. But economy does not fall over, budgets will process. Above all, big shifts in military American defence planners cannot rely on grow, too, absolutely and possibly as a planning take decades: America needs to that, so they must respond. share of GDP. Other things being equal, think now about China in 2025. In this way two states that never intend China can project power into its backyard All this points to an important princi• harm can begin to perceive each other as more easily than America can project pow• ple. Military planning is framed di erently growing threats. If you do not arm, you er across the ocean. At risk is what Mr from diplomacy. Diplomats are interested leave yourself open to attack. If you do, Gates has called Œthe operational sanctu• in what they think states intend to do, but you threaten the other country. A British ary our navy has enjoyed in the western military planners have to work with what historian, Herbert Butter†eld, called this Paci†c for the better part of six decades. they think states can do. Intentions change the Œabsolute predicament and irreducible Third, although the United States is able and states can mislead. If you are charged dilemma. It is one reason why relations to respond to China, it will have to over• with defending your country, you need to between China and America will proba• come some obstacles †rst. America’s mili• be able to meet even improbable threats. bly sour. 7 Less biding and hiding

China is becoming more nationalistic and more assertive. How will other countries react?

HO is your enemy? It was a †ne China continued to put foreign policy sec• There are two possible reasons. One is ŒWBeijing day in early summer this ond‹this time for the sake of economic de• that China’s strategy has begun to change. year. In the seminar room on the campus velopment. Again, that required co•opera• Some Chinese argue that, now their coun• of Peking University one of a delegation of tion with America, the best source of try is strong, it no longer needs to kowtow visiting American academics posed the demand, technology and investment. to American power. The other is that Chi• question to Wang Jisi, dean of the School Deng summed up the policy in a famous nese society itself has begun to change. In of International Studies. There was a mo• slogan: ŒCoolly observe, calmly deal with what Richard Rigby, of the Australian Na• ment’s silence. Mr Wang hesitated before things, hold your position, hide your ca• tional University in Canberra, calls Œa frag• looking up and replying: ŒMost Chinese pacities, bide your time, accomplish things mented authoritarian one•party state, the would say the US is the enemy. where possible. When the world began to leaders need to listen more closely to what And yet, as Robert Ross sets out in his worry about China’s surging power, a se• other people think. book, ŒChinese Security Policy, America nior oˆcial tried to calm fears, pledging a and China have had a remarkably produc• heping jueqi (peaceful rise). Even that had If we can, we will tive partnership since President Richard to be watered down, as the jue in Œrise sug• Start with China’s changing strategy. Chi• Nixon and Henry Kissinger turned up in gests Œtowering as a peak. These days Hu na has a keen sense of its growing national Beijing in 1972. At †rst this was based on a Jintao, China’s leader, prefers the deliber• power and American decline, sharpened shared antagonism towards the Soviet Un• ately bland Œharmonious world. by the †nancial crisis, which uncovered ion, which China had fought in border Over the years China’s leaders have ‡aws in America and Europe and found clashes in 1969. Under Mao, China had of• worked hard to steer relations with Ameri• China to be stronger than many had ex• ten bullied its neighbours, but had now ca through their inevitable crises. By and pected. ŒThere is a perception in China that subordinated this part of its foreign policy large, they have succeeded. Now China’s the West needs China more than China because co•operation with America was behaviour‹most recently towards Japan, needs the West, says one diplomat in Beij• more important. Under Deng Xiaoping, South Korea and the South China Sea‹has ing. America’s diˆcult wars have added to Mao’s eventual successor, China even re• begun to alarm China•watchers. Yet why the impression. According to Ra aello Pan• luctantly accepted America’s continuing would the country’s leaders suddenly risk tucci, a visiting scholar at the Shanghai arms sales to Taiwan. undermining a policy that has brought Academy of Social Sciences, Chinese an• When the Soviet threat evaporated, China such prosperity? alysts Œgleefully conclude that NATO1 The Economist December 4th 2010 A special report on China’s place in the world 7

2 forces will lose in Afghanistan. ers agree that now is the time to assert the that China should be Œless submissive to• ŒWe used to hide our power‹deny our country’s power. The apex of Chinese poli• wards the outside world. power, a Chinese scholar told David tics is so closed to the world that analysts Such people’s assertiveness partly re• Lampton of the School of Advanced Inter• cannot be sure. In 2009 Mr Hu said China ‡ects the patriotism that the government national Studies in Washington. ŒBut then could Œactively make modest contribu• encouraged in order to prop up its legitima• this became increasingly impossible as our tions to international issues. On their an• cy after it brutally put down the protests in strength increased. For a time this led to nual summer retreat, at the resort of Bei• Tiananmen Square in 1989. First came a redoubled e orts to reassure America and daihe, the country’s leaders reportedly weekly ‡ag•raising ceremony with a rous• the region. But today, according to Yuan debated whether China should edge away ing address in every school. Next, muse• Peng, of the China Institutes of Contempo• from Deng’s Œbide and hide slogan. Some ums and relics were designated Œpatriotic rary International Relations in Beijing, in‡uential party journals that may re‡ect education bases. In 1991Jiang Zemin, then Œmany Chinese scholars suggest that the the leaders’ thinking have concluded, Œnot general secretary, wrote that patriotic edu• government give up the illusion of US part• yet. However, even that position strikes cation Œlet the Chinese people, especially nership and face squarely the profound the youth, enhance their pride and self• and inevitable strategic competition. con†dence in the nation and prevent the China’s desire to assert itself springs rise of the worship of the West. from a natural appetite. A rising country is like a diner sitting down to a full table: until The rise of nationalism he starts eating, he does not realise how The †rst generation to get that treatment is hungry he is. ŒPower changes nations, now nearing its 30s, and its nationalism writes Robert Kagan, an American foreign• shows every sign of being genuine and policy commentator. ŒIt expands their widespread. ŒOn Tibet and Taiwan it’s not wants and desires, increases their sense of just Chinese ministers who bang tables, entitlement, their need for deference and says Lord Patten, who negotiated the hand• respect. It also makes them more ambi• over of Hong Kong from Britain to China, tious. It lessens their tolerance to obstacles, Œbut Chinese dissidents, too. ŒThis is a their willingness to take no for an answer. people with a sense of their past greatness, China has been good at suppressing recent humiliation, present achievement that appetite, but it also has growing rea• and future supremacy, says Mr White, the sons to project power. Chinese companies former Australian security and defence of• are scouring the globe for the raw materi• †cial. ŒIt’s a potent mix. als they need. Already China is Saudi Ara• China’s more commercial media have bia’s biggest customer. It imports about found that nationalism sells. According to half of the oil it burns, a share that will rise Susan Shirk, an American academic and to two•thirds by 2015 and four•†fths by former deputy assistant secretary of state, 2030. China cares what happens in the readers like stories complaining about Ja• countries that supply it. pan, Taiwan and America‹and the cen• An irony not lost on Kurt Campbell, sors are usually happy to see coverage of America’s assistant secretary of state, is such things. SIPRI found that the most in• that China’s strategy of acquiring natural ‡uential journalism on foreign policy ap• resources has so far been based on what he pears in the Global Times, which is written calls Œan operating system provided by by hardline nationalists. the United States‹which guarantees sta• The country’s excitable Œnetizens tend bility and the free ‡ow of maritime traˆc. to spread the idea that China is misunder• One reason why China is now building an stood and to see a slight round every cor• ocean•going navy is to protect its raw mate• ner. In 2008, during a Chinese row with rials and goods from embargoes. Vietnam over the South China Sea, anoth• This re‡ects a lack of faith in the global some diplomats as a shift. In the 1990s the er suggested teaching the Vietnamese a les• trading system, part of an underlying fear argument was about whether China could son‹and published an invasion plan to that the West is fundamentally hostile to work with America in the long run. Now it show how. This feeds China’s sense of vic• China’s prosperity‹ŒWesternising, divid• is about when to apply pressure. timhood. One blogger and journalist, ing and weakening, as the slogan goes. Whatever the leaders think, they are called Fang Kechang, worked out that since Jonathan Paris, a London•based security operating in a society that is changing rap• 1948 the Chinese people had oˆcially specialist, says young Chinese are disen• idly. These days they are more in‡uenced been Œhumiliated at least 140 times‹and chanted by what they see as Western Chi• by a new set of foreign•policy interests, in• that the insults were more common in the na•bashing. Some in‡uential groups think cluding resource companies, †nancial in• reform era than in Mao’s time. that foreign calls for China to be a Œrespon• stitutions, local government, research or• What passes for public opinion in Chi• sible stakeholder are in fact designed to ganisations, the press and online activists. na is not the only source of pressure on the keep the country down, and that it should Linda Jakobson and Dean Knox of the leaders. The factions within China’s elite co•operate only if the West makes conces• Stockholm International Peace Research Œselectorate, no passive monolith, have sions on issues such as Taiwan and Tibet. Institute (SIPRI), who have studied these also been †nding their voice. And that, too, The question is whether China’s lead• groups, say many of them feel strongly tends to nudge policy towards national•1 8 A special report on China’s place in the world The Economist December 4th 2010

2 ism. Foreign a airs used to be the business of the pro•detente foreign ministry. It was mocked as the Œministry for selling out the country and, supposedly, was sent calci• um pills by members of the public who wanted to sti en its spine. Now the issues are more complex, do• mestic ministries and mid•level bureau• crats are also involved‹and they tend to be more nationalistic than senior foreign• ministry oˆcials. The SIPRI researchers found that the ministry of state security, in particular, has a bigger role in foreign poli• cy. At the climate•change talks in Copenha• Japanese demonstrations in South Korea Œbide and hide, three things are in their fa• gen authority lay with the National Devel• in the 1960s fuelled the pro•democracy vour. First, popular nationalism counts for opment and Reform Commission, charged movement‹just as protests against Afri• most in territorial disputes, such as Taiwan with economic development. China at• can students preceded the Tiananmen and the islands o China’s coast. Accord• tracted foreign criticism for taking a hard protests in 1989. Foreign policy has a his• ing to Jian Yang, of Auckland University, line, against the foreign ministry’s advice. tory of destabilising governments in Chi• New Zealand, nationalism plays less of a The PLA’s in‡uence is harder to read. na, says Rana Mitter of Oxford University, part in technical areas such as economics, On the one hand since the 1992 party con• and the Chinese are quick to blame foreign which may matter as much, if not more, to gress no oˆcer has been picked for the all• failures on domestic weakness‹Œdisorder China’s leaders. Second, China does not important standing committee of the Polit• at home, calamity abroad, they like to say. obviously have a grand alternative vision buro. At the end of the Cultural Revolution Nationalism may frame an issue before to the liberal order that America has spon• more than half the Politburo was from the the leaders get to deal with it. By the time sored since the second world war. It need PLA; now only two out of 24 are. On the the row over, say, the disputed Senkaku/ not run into ideological battles abroad. other, writers from PLA research institu• Diaoyu Islands reaches their desks, the But third and most important, there is a tions are more outspoken and conspicu• propaganda department, along with com• lot that America and China agree on. Both ous than they used to be, using newspaper mentators in the press and statements want a healthy world economy, a stable commentaries and television appearances from the PLA, may have created a context Asia, peace in the Middle East, open sea to put over the PLA’s views. that they cannot back away from without lanes, a limit to proliferation, an open trad• Unlike professional Western armies, looking weak. ing system, and so on. They have plenty of the PLA speaks out on foreign policy. In his This dynamic is not new. It greatly com• reason to want good enough relations to book ŒThe Party, Richard McGregor plicated the mid•air collision between a accomplish such things. points out that it contains roughly 90,000 Chinese †ghter and an American spy party cells‹one for every 25 soldiers. Al• plane in 2001, which the PLA had (wrong• Turn up the assertiveness though promotion these days depends on ly) blamed on the Americans. But just now, The most likely outcome is a more asser• competence as well as ideology, the PLA’s in the run•up to the change of the country’s tive China that wants to get more done political role gives it a voice in security leadership in 2012, seeming to be a push• abroad without fundamentally upsetting policy. Unlike Mao and Deng, today’s lead• over could wreck careers. the world order. On sensitive territorial is• ers did not have a military background, so The risk, writes Ms Shirk, is that Œcom• sues where the party’s credentials are at they may need to hold the PLA close. promise is likely to be viewed as capitula• stake, China may be uncompromising and There is no reason to believe that the tion. That creates dangers for anyone in increasingly unreasonable. Elsewhere its leaders’ authority has dimmed. If they China who favours detente. Speaking to leaders will probably be looking for deals‹ think a policy is of paramount importance Mr Lampton about Taiwan, one Chinese though they will insist on better terms, as for the country or the party, they will get scholar put it this way: ŒIf we suppose that be†ts a global power. their way. The authorities can still put there are two options and they use tough How easily will the world accommo• down pretty much any demonstration if measuresðand the leader fails to resolve date this more assertive China? For the they choose. But politics is rarely black and [a problem], he is justi†ed. But if [he] uses best part of a decade China has tried hard white, even in China. Government is usu• too much honey and he fails, he is regarded to reassure its neighbours that they have ally about shades of grey. When the lead• as guilty by all future generations. nothing to fear from its rise. So its new as• ers hear a single message from the press, In the long term the leaders’ scope for sertiveness will be doubly uncomfortable, netizens and their own advisers, they may action will depend on China’s economic especially if it is mixed up with bad•tem• feel they need to listen. When public opin• growth. A booming China will indicate pered territorial disputes. In other words, ion is split, they can usually a ord to ig• that the country is strong enough to press Asian security will be determined not just nore it. James Reilly, of the University of its case in the world. A weak China where by how China uses its new strength but by Sydney, who has studied China’s policy to• growth has stumbled and the party feels how other countries react to it. This was wards Japan, says that public pressure is under pressure at home could stir up trou• the idea behind China’s conciliatory New most potent when the elite is divided. ble abroad. That does not leave much Security Concept. Other countries will re• Either way, the authorities will watch scope for a less assertive China. lax if they are reassured that China does public opinion, if only because protest can Supposing that the leaders want to not pose a threat. Unfortunately, the charm become a covert form of opposition. Anti• cleave to Deng’s original injunction to o ensive has not altogether worked. 7 The Economist December 4th 2010 A special report on China’s place in the world 9

In the balance

Their wealth depends on China, their security on America. Which way should Asian countries face?

N HIS book ŒThe Rivals, Bill Emmott, a transformed itself from a sceptic of liberal• from taking real, binding decisions. Being Iformer editor of this newspaper, quotes ised and preferential trade into one of their in the media spotlight does not help. Asia’s a senior Indian foreign•service oˆcial on strongest proponents. various forums and treaties Œlooks more the subject of India and China. ŒThe thing China has joined multinational group• like a list of cats and dogs than a coherent you have to understand, he says, Œis that ings (even, in the Shanghai Co•operation and predictable framework for the future, both of us think that the future belongs to Organisation, helping to found one). It is writes Gary Schmitt of the American En• us. We can’t both be right. now a member of more than 50 intergov• terprise Institute in Washington. When economists and businesspeople ernmental and over 1,000 international Part of the trouble is that these forums look at China’s rise, they see a blessing in non•governmental out†ts. You can †nd have to purge a lot of bad blood. Although which everyone stands to gain from every• Chinese delegates at the ASEAN Regional China gets on better with its 14 neighbours one else’s prosperity. The country has be• Forum, ASEAN Plus Three, the ASEAN De• now than it has done for centuries, it still come the chief trading partner for most fence Ministers’ Meeting and APEC‹and fully trusts none of them‹and vice versa. parts of the region‹even if the West is an that is only the meetings starting with A. Relations with Japan have never got over important source of †nal demand. As Chi• Asian states hope that, like Gulliver, China the imperial occupation. Since 1949 China na becomes richer, it will become a market can be bound by these regional threads. has skirmished with Russia and fought the for the rest of Asia, just as the region will That is to put a lot of faith in multina• UN in Korea and India and Vietnam. become a bigger market for China. tional forums, however. Criticising dip• Alas, security does not work that way. lomats for trying to talk peace might seem Naval battles When two countries do not really trust harsh, but Asia has too many regional as• In addition China has pressed its sea each other, greater security for one under• semblies. The Japan Centre for Interna• claims with a vehemence that it has most• mines the security of the other, as that In• tional Exchange counted 277 multilateral ly avoided in land•border disputes, per• dian oˆcial revealed. In a troubled conti• intergovernmental meetings about securi• haps because †sh and mineral riches are at nent like Asia, countries therefore look to ty in 2007 alone. stake. In the past 36 years China has skir• America to save them from an increasingly Nick Bisley, of La Trobe University in mished over the Paracel Islands with Viet• powerful China‹to Œthe water far away Australia, who has studied Asia’s regional• nam (1974); over the Spratly Islands with for protection from Œthe †re nearby. security groups, concludes that this seem• Vietnam (1988) and the Philippines (1994); Naturally, Asian countries want to have ing abundance is really a mask for mis• with South Korea over Socotra Rock it both ways: to resist China’s power but to trust, as each Asian country tries to shop in (2006); and with Japan over the Okinotori continue trading with it; to bene†t from its own favoured forum. Meetings can be Islands (2004) and the Senkaku/Diaoyu Is• American security but without sacri†cing super†cial and leaders tend to shy away lands (most recently, 2010). Chinese commerce. This is a diˆcult trick With so many neighbours pulling in so to pull o , and if relations between Ameri• many di erent directions, Beijing’s foreign ca and China become harder to manage policy faces inevitable contradictions. over the next decade or so, as looks likely, When North Korea sank the Cheonan, Chi• the region will sit uncomfortably between na had to choose between security and its two poles. The lesser powers could even increasingly close ties to South Korea. In add to the tension between the two giants. siding with the North, it sent a damaging That would frustrate China, which has signal to the South that it was unwilling or been at pains in recent years to reassure its unable to control its ally. Likewise, Chinese neighbours by doing the right thing, as relations with India are complicated by well as by soft•soaping them with all the what happens in neighbouring countries. talk about a Œpeaceful rise. It has, for in• Not only does India mistrust China in Paki• stance, gone out of its way to settle its bor• stan, but it vies with it in places such as Ne• der disputes‹and on notably generous pal and Sri Lanka that it sees as within its terms. Taylor Fravel, of the Massachusetts own sphere of in‡uence. Institute of Technology, concluded that in How, then, do Asian countries cope settling 17 of its 23 territorial disputes China with China’s strength and the shortcom• usually agreed to take less than half of the ings of multinational organisations? They contested land. It has also usually been are slowly but steadily buying weapons as generous in economic diplomacy, signing they get richer. In its defence white paper a series of free•trade agreements across last year Australia worried aloud about a Asia. ŒIn the space of a decade, according powerful China and suggested renewing to Marc Lanteigne, of Victoria University and doubling its submarine ‡eet as well as in Wellington, New Zealand, ŒChina has designing a more capable Œfuture frigate. 1 10 A special report on China’s place in the world The Economist December 4th 2010

2 Vietnam has ordered six Kilo•class subma• George Washington o the Vietnamese Cohen and Sunil Dasgupta argue that they rines from Russia. Earlier, Singapore coast. American naval ships have docked also su er from inter•service rivalry, poor bought two Swedish Archer•class subma• in Vietnam, which has agreed to repair procurement and a lingering suspicion of rines and Malaysia and India between American Sealift Command vessels. It the use of armed force (which from inde• them bought eight French Scorpène•class seems longer than 35 years ago that the pendence was associated with British co• submarines. two countries were at war. lonial rule). Japan, too, has been arming itself in a Or take South Korea, a long•term Amer• roundabout way. Although its oˆcial de• So•so about Uncle Sam ican ally, which has veered from security fence budget is only 1% of its GDP and over Yet there is nothing straightforward about to economics and back again. Under Presi• the past decade has shrunk by about 5% in looking for security to America‹Asia’s dent Roh Moo•hyun the country peeled o nominal terms, in real terms it has re• least distrusted power, as Lee Kuan Yew, from America in an attempt to demon• mained almost static. Japan has also been Singapore’s ŒMinister Mentor, has de• strate its independence as an Asian power shifting resources towards its navy, which scribed it. Sometimes countries have to with increasingly close economic links to is still more than a match for China’s. And overcome obstacles at home. During China. In 2007 Roh won America’s agree• Richard Samuels, of the Massachusetts In• George Bush’s presidency, India and ment that from 2012 South Korea would stitute of Technology, has shown that the America cemented their new entente with once again have command of its own Japanese coastguard, †nanced outside the a deal to work together in nuclear power. forces in the event of a war. He also sup• defence budget, now has a ‡eet of ships Yet even that degree of intimacy stirred up plied the North when America cut o en• and rules of engagement that are laxer domestic opposition from left•wing Indi• ergy aid. However, his successor, Lee My• ung•bak, has wrenched policy towards American security once more. He has de• layed the transfer of wartime command to 2015 and taken a hard line on North Korea. In Japan di erent factions exhibit all these tendencies and more. Parts of the go• verning Democratic Party of Japan have sought to move Japan closer to China. Parts of the Liberal Democratic Party, now in op• position after decades in government, re• sent the presence of 36,000 American mil• itary personnel in bases dotted across the country. Others are so wedded to paci†sm that the Americans wonder if the Japanese would actually turn up if they were need• ed. And yet others harbour doubts wheth• er Japan can always count on America. To many Japanese, the row over the Senkaku/ Diaoyu Islands has shown how prickly China can be. After the coastguard arrested the †shermen, China cancelled meetings, gummed up Japanese trade and stopped exports of rare earths. Japanese diplomats were pleased that Mrs Clinton spoke out in than those of the self•defence forces. ans. A fully ‡edged defence agreement their support. Yet MIT’s Mr Samuels thinks As well as arming themselves, Asian with America to contain China does not America needs to reassure Japan, its most countries have drawn closer to the United seem on the cards for now. India would vital ally in Asia. If Japan appeared to States. This was on dramatic display at the not relish a junior role and it prides itself doubt it, America would see all of its Asian ASEAN regional forum in Hanoi in July. In on its non•alignment. alliances su er. a piece of choreography that infuriated Nor would it wish completely to cast The calculation for China is di erent. Its China, ASEAN members complained one out China‹a rival, yes, but also an ally on e orts to cultivate its neighbours have pro• after the other about the heavy•handed such things as climate change and global duced only mixed results. Economic ties way their neighbour was asserting a claim economic issues. Besides, as Rahul Roy• buy a certain amount of goodwill, but over the South China Sea. The statements Chaudhury of the IISS points out, Indian much of the region rushes o to America culminated with Hillary Clinton, Ameri• politicians are disconnected from the at the †rst sign of trouble. As China’s appe• ca’s secretary of state, underlining how her armed forces. Without an e ective nation• tite to assert itself grows, that could easily country would intercede to ensure safe al security council in which to make its become a source of dissatisfaction, which passage through international waters. case, the navy has only slowly been able to would feed the superpowers’ mutual mis• Progress has been made bilaterally, too. convince the government that China may trust. Either way, America and China are In August Vietnam and America began become a threat. likely to compete to win the loyalty of the high•level military co•operation, with a The Indian services can mount impres• region. That, too, could poison the most meeting in Hanoi. Vietnamese oˆcials sive operations, but in a new book on the important relationship of all‹the one be• have been aboard the aircraft•carrier USS country’s military modernisation Stephen tween China and America. 7 The Economist December 4th 2010 A special report on China’s place in the world 11

Friends, or else

Living with China’s rise will test America’s diplomacy as never before

N A recent essay Hugh White, a former na is to treat it like one. tracks acts as an excuse to leave important IAustralian security and defence oˆcial, America may one day feel it has no issues unresolved in America. China describes the following exchange with his choice but to focus on security alone, hawks and China doves can all support the American counterparts: ŒI put this cate• which is what China fears. By contrast, to policy, because both can continue to think chism to them: ‘Do you think America focus on economics and forget security that they will ultimately be proved right. should treat China as an equal if its power makes no sense at all. America has vital in• That is politically handy in Washing• grows equal to America’s?’ The answer is terests in Asia. It wants to prevent nuclear ton, but hardly ideal as a policy. The en• always no. Then I ask, ‘Do you think China proliferation in the Korean peninsula and gagement tends to be run by China special• will settle for anything less than being Japan. It has allies to protect and threats to ists in the state department and the hedge treated as equal?’ The answer to that is al• police. It needs accessible sea lanes and tends to be run out of the Pentagon. In the• ways no, too. Then I ask, ‘So how do you open markets. America is the world’s pre• ory the policy’s two dimensions should be expect the US and China to get along?’ I eminent power. It cannot surrender Asia weighted according to whether or not Chi• usually get a shrug by way of reply. without losing in‡uence everywhere else. na’s behaviour is threatening. With the That shrug is a measure of America’s Hence for the past 15 years America has best will in the world, the departments of diˆculty in designing a China policy. fallen back on a two•track China policy. Ba• state and defence do not always work well America wants China to be a thriving mar• rack Obama articulated the †rst track on together. All too often, a twin•track policy ket for its goods. It also wants China to be• his visit to China in November last year. He can function as two separate policies. come an active, responsible power in told the students at Fudan University, in world a airs. Yet at the same time it feels Shanghai: ŒThe United States insists we do Read my lips threatened by China’s growing economic, not seek to contain China’s rise. On the That matters because Mr Obama’s gener• industrial, diplomatic and military might. contrary, we welcome China as a strong ous words towards China are not taken at When America dislikes a position China and prosperous and successful member of face value there. However sincere, no presi• has taken, it cries foul. This mix of partner• the community of nations. This means, as dent’s words could be: pledges are broken ship and rivalry is a recipe for confusion. the president later explained in front of Hu and presidents come and go. America One way to resolve these tensions Jintao, his Chinese opposite number, that sends a signal when it redeploys naval would be to put security †rst. America China’s Œgrowing economy is joined by forces to the Paci†c and its admirals tell could aim to block China now before it gets growing responsibilities. Congress that ŒChina’s interest in a peace• any stronger. America won the cold war by ŒEngagement is backed by a second ful and stable environmentis diˆcult to isolating the Soviet economy and stale• policy, best described as hedging. America reconcile with [its] evolving military capa• mating its armed forces. But trying that must be able to deploy enough force to de• bilities. Those judgments make good again would be a bad idea, as Robert Art ter China. Presidents do not articulate this sense for America’s security, but they get in explains in a recent issue of Political Science track quite so eagerly, but Admiral Robert the way of the message that the United Quarterly. For one thing, the cost would be Willard, head of Paci†c Command, was States welcomes China’s rise and has no astronomical; for another, America might clear enough in his remarks to Congress intention of blocking it. su er as much as China. The two coun• earlier this year: ŒUntilðit is determined Hedging is not engagement’s only com• tries’ economies are intertwined and Chi• that China’s intent is indeed benign, it is plication. For much of the past 15 years, na owns more American government debt critical that we maintain the readiness of commerce drew America towards China. than anyone else. In war, nations override our postured forces; continually reinforce Indeed, globalisation became a large part such factors out of necessity. If an Ameri• our commitment to our allies and partners of the engagement story. But now that one can president tried to override them in in the region; and meet each challenge by in ten Americans is without work, eco• peace out of choice, he would face dissent the PRC in a professional manner that is nomic policy has taken on a protectionist at home and opprobrium abroad. consistent with international law. tinge. If China loses the political backing of America faced some straightforward, if America’s big•business lobby, which has The risks of containment terrifying, calculations in its monochro• lately been growing restive at its treatment In any case, a policy of containment risks matic relationship with the Soviet Union. in China, then the tone in Washington will back†ring, except against an unambigu• By contrast, its technicolour dealings with shift further. Thus commerce could also ously hostile China. Unless America could China are less apocalyptic, but many times start to add to Chinese fears that America persuade large parts of the world to join in, more complex‹almost unmanageably so. will ultimately choose to block it. China would still have access to most mar• In principle, the policy’s two tracks †t The second doubt about America’s Chi• kets. A belligerent United States would risk together well. Engagement is designed to na policy is whether America has fully ac• losing the very alliances in Asia that it was reward good behaviour and hedging to de• cepted what engagement asks of it. The seeking to protect. And Joseph Nye, of the ter bad. In practice, however, the hedge policy rests on two notions. First, that Chi• Kennedy School at Harvard, has argued risks undermining the engagement. To see na can develop as a Œsatis†ed power‹one that the best way to make an enemy of Chi• why, consider that the existence of two that feels no need to overturn the post•war 1 12 A special report on China’s place in the world The Economist December 4th 2010

2 order created and maintained by America. America’s complaint is Œnot that China And second, that if China more or less says no to global responsibility or denies abides by global norms, America will be its role in world a airs, but rather that it de• able to accommodate its interests. So en• clines to say yes to every US request. gagement supposes that China and Ameri• Accommodation is easy when that ca can †nd a stable mix of Chinese adher• means letting China do what America ence and American accommodation. wants. But will America let China do Does China abide by Œglobal norms? things that it does not want? The shadow At one time the common belief was that, as overhanging America’s engagement poli• Bill Clinton said, Œwhen it comes to human cy is that China will not change enough to rights and religious freedom, China re• satisfy America and America will not yield mains on the wrong side of history. Some enough to satisfy China. That may sound Western analysts like to issue caveats abstract, but it could at any time become about devious, far•sighted Chinese strat• brutally real, either on the Korean Peninsu• egy. Against this racial stereotype, how• la or across the Taiwan Strait. ever, it was America, not China, that founded its policy on the maxim of Sun Korean conundrum Tzu that it is best to win without †ghting. Nobody knows whether the North Korean Chinese values have changed beyond regime will survive, nor what might come recognition since Mao’s day, when terror after Kim Jong Il and Kim Junior. But imag• was dismally routine. As Richard McGre• United Nations, the G20, the Nuclear Non• ine for a moment that, on the death of the gor writes in his book, ŒThe Party, terror is Proliferation Treaty (NPT) and the World Dear Leader, North Korea descends into now used sparingly. Hu Jintao’s China Trade Organisation (WTO) could, in the• anarchy or lashes out, as it did in the island works on seduction and bribery rather ory at least, operate even without Ameri• attack last month that killed South Korean than suppression. And yet China is still a can leadership. According to this picture, servicemen and civilians. The ensuing cri• one•party state and terror remains essen• America can accept China so long as it †ts sis would severely test the capacity of Chi• tial to its survival. When the party needs in with this order. na and America to live with each other. protecting, it is applied without scruple. But the picture is ‡awed. America has Everyone would be worried about Likewise, in international a airs China indeed been willing to be bound by rules North Korea’s nuclear weapons. America no longer backs insurgencies against its in ways that 19th•century European pow• may want to seize them, but China would neighbours or routinely adopts intransi• ers never were. That is one reason why so not like American soldiers on its borders. gent positions, seemingly for the sake of it. many countries have been prepared to live Nor would China wish America or South Yet the West still †nds it a diˆcult partner. under its sway. However, when America Korea to assert control over the North, an American critics such as Gary Schmitt of thinks important interests are at stake, it ally and a bu er. In the longer run, China the American Enterprise Institute in Wash• still ignores the rules, just like the next he• may expect to regain the sort of in‡uence ington accuse China of a Œsupermarket ap• gemon. In 2005 the bid of the China Na• over a uni†ed Korea that, as the dominant proach: it buys what it must, picks up tional O shore Oil Company to buy Asian land power, it has exercised through• what it wants and ignores what it does not. America’s Unocal was, in e ect, blocked out most of history. after a public outcry. When America want• This raises a host of questions. Would Hope is not a policy ed a nuclear deal with India, it rode a coach America trust China to mop up North Ko• The hope is that in years to come China and horses through the NPT. It fought in rea’s plutonium and enriched uranium? will indeed grow to be more democratic the Balkans in the 1990s and again in Iraq Would China accept the idea that South and that it will play its part in world a airs. in 2003 without the endorsement of the Korean troops should re•establish order in But, says Richard Armitage, deputy secre• United Nations. It may yet go to war with the North? Would it allow Korean reuni†• tary of state under George Bush, Œhope is Iran on the same basis. cation? If that happened, would America not a policy. Given the problems of West• This is not to dispute the merits of each contemplate ultimately withdrawing its ern democracies and China’s economic case, though some of those decisions troops from the peninsula? success and relative stability, says Richard looked foolish even at the time. Rather the Depressingly little thought has been Woolcott, a special envoy for the Austra• point is that superpowers break the rules given to these questions. As far as anybody lian prime minister, China’s conversion to when they must‹and nobody can stop knows, China is not willing even to discuss a multiparty democracy no longer seems them. Over time that logic will increasing• them with America, because it does not quite so inevitable. Just now, the Commu• ly apply to China too. America must de• want to betray a lack of con†dence in its ec• nist Party looks †rmly in control. cide whether Œaccommodating China centric ally in the North. Yet, if talking Suppose, therefore, that China remains means living with this or denying it. about Korea is awkward now, it will be a communist, authoritarian, one•party In fact, there are diˆculties with judg• even more fraught in the teeth of a crisis. state with a growing appetite to get its way. ing whether China is a responsible stake• If the two Koreas share the world’s scar• Can America accommodate it? holder. From the Chinese point of view, iest land border, the Taiwan Strait is its scar• Some American thinkers, like John America always seems to de†ne accept• iest sea passage. China’s insistence on re• Ikenberry, of Princeton University, make able international conduct as falling in uni†cation is absolute. The story is told of the argument that America has created a with its own policy. In the words of Yuan how, a few years back, the editor of a rules•based system that is uniquely able to Peng, of the China Institutes of Contempo• Shanghainese newspaper celebrated a absorb new members. Institutions like the rary International Relations in Beijing, new semiconductor factory in the city as 1 The Economist December 4th 2010 A special report on China’s place in the world 13

2 the biggest in China. Because he had for• to want neither to enrage China by seeking weak. Even now, when the mood is good, gotten about Taiwan, he had to o er self• independence, nor to want to surrender the island is a test of Chinese and Ameri• criticism and take a pay cut. their democracy to a one•party state. can restraint. America needs to be clear However, rather than beat Taiwan with This is just †ne with America. Its arms that it will not be manipulated: Taiwan a stick, China these days spoons it honey sales to Taiwan continue, but it could just cannot rashly bid for independence on the instead. Hundreds of ‡ights a month link about live with a single China so long as assumption that America will protect it. the mainland to Taipei. The free•trade uni†cation came about peacefully. What it China needs to understand that coercion agreement with Taiwan signed this sum• could not abide would be uni†cation by would destroy its credentials with the rest mer included measures to help Taiwanese force. Strictly, the Taiwan Relations act of of the world. America does not expect Chi• farmers, who tend to support the pro•inde• 1979 does not compel America to come to na to renounce its aims; it does expect Chi• pendence Democratic Progressive Party Taiwan’s aid. However, barring egregious na to satisfy them within the system. (DPP). China has recently hinted that it provocation of China by Taiwan, America Policymakers often sneer at diplomats might one day be willing to point its mis• would have little choice but to intervene. If for their compromises and half•truths. Yet siles away from Taiwan. America just stood by, it would lose the the high calling of diplomacy is to †nd For the moment the policy seems to be trust of its allies across the world. antidotes to the rivalries that poison geo• working. The DPP lost power in 2008. Nev• Taiwan remains a ‡ashpoint. Taiwan• politics. Not since the 19th century have er mind that its successor, the Kuomintang, ese democracy could lead to a desire for in• they had as great a task as managing the re• is the Chinese Communist Party’s old ene• dependence, Chinese nationalism could lationship between China and America. In my. Under Ma Ying•jeou, Taiwan is being make reuni†cation more urgent, and Mr Obama’s administration they have a pragmatic. The Taiwanese people appear America could be afraid of appearing name for this: Œstrategic reassurance. 7 Strategic reassurance

Many things could worsen relations between China and America. Here are ten ways to make them better

IDING your time and hiding your pow• That makes for a highly dangerous mix it will be hard to pull back. The leaders of B ers makes sense if you are a weak of forces. After a decade in which America America and China talk volubly about country that expects to become strong. was distracted by terror and China preoc• their desire for good superpower relations. Eventually, though, you will want to take cupied with economic growth, China’s for• If they mean what they say, here are ten advantage of the opportunities that your eign relations are now likely to become goals to aim for: new power has created. Has that moment more diˆcult. The risk has been under• ¹ China needs to be certain of having a nu• arrived for China? Its military power is, lined in the past few months by a series of clear second strike. As Robert Art of Bran• globally, no match for America’s. But the disputes, with Japan over some islands, deis University argues, both China and PLA is beginning to deny America’s 65• over the sinking of the Cheonan, and over America will feel more con†dent if they year dominion over the Western Paci†c. claims to China’s coastal waters. know their homelands are secure. China Fuelled by nationalist opinion, a debate is Those one•o rows must not be al• has been spending money to ensure that it under way within China’s elite over lowed to frame China’s relations with the could answer a †rst strike. America should whether now is the time for the country to rest of the world. Yet each assumes inordi• willingly surrender this military advan• stand up. This will in‡uence China’s lead• nate signi†cance, because of the fear that tage because it is destabilising‹and insta• ers, even though the signs are that for the China will be aggressive and the suspicion bility frustrates the overriding policy aim, time being they would prefer to concen• in China that America means to block its which is China’s peaceful rise. trate on economic growth and their huge rise. Every incident is seen as a test of what ¹ America should seek to maintain mili• domestic problems. will come next. tary superiority in the Western Paci†c. For The outside world is suspicious of Chi• the sake of all its Asian alliances, the Un• na and worried about what sort of power Prevention, not cure ited States must be able to guarantee the it will turn out to be. Asian countries are The solution is to †nd ways to minimise sea lanes and to present a credible threat torn between looking to China for their the mutual mistrust between China and that it will come to Taiwan’s aid against a wealth and turning to America for their se• America. This will be diˆcult but not Chinese attack. For the time being, it still curity. If China throws its weight around, hopeless. China is not looking for new col• can. But to retain that advantage, America they will vigorously resist. onies and it has no ideology to export. It will need to harden its forward bases, in• America feels increasingly vulnerable, shares many American aims: stability, nuc• vest in missile defence and submarines too. Its armed forces have identi†ed the lear non•proliferation and, most of all, a and counter China’s capacity in asymmet• threat in the Paci†c. Its economic diplo• thriving world economy. These goals are ric electronic, cyber and space warfare. macy has become aggressive and unpre• best served by peace. This will inevitably add to Chinese insecu• dictable. This further complicates Ameri• Mistrust feeds upon mistrust, aggres• rity. On the other hand it will add to the se• ca’s China policy, an uneasy and sion upon aggression. In geopolitics, as in curity of China’s neighbours. Just now that potentially confusing combination of en• life, the best medicine is prophylactic. If is more important. gagement and hedging. ever the relationship falls into antagonism, ¹ China needs to share more of its nuclear 1 14 A special report on China’s place in the world The Economist December 4th 2010

gion’s security forum. That will take a leap of faith from countries like Singapore, which has a special place in ASEAN. How• ever, Asia needs to put collective security †rst for once. ¹ Asian countries should put more e ort into non•traditional security. According to Katherine Morton, of the Australian Na• tional University, a lot of work is to be done in such areas as climate change, health, the environment, piracy and terro• rism, where threats by their nature cross borders. Just as important, however, non• traditional security presents a chance for 2 and conventional military doctrine with na’s faith in the system and makes Ameri• Asia’s military forces to learn how to work America. Compared with the elaborate ca poorer and less able to defend itself. together without the usual tensions‹as cold•war communication between Ameri• ¹ The Chinese Communist Party should when China sent its ships to help an inter• ca and the Soviet Union, China and Ameri• stop using censors and commentators to national naval force prevent piracy in the ca do not talk. Military•to•military links spread a virulent form of nationalism. Its Gulf of Aden. Some Asian countries are were among the †rst things to go when leaders will †nd foreign relations easier to squeamish about the e ect of non•tradi• America sold arms to Taiwan earlier this manage if they draw less on historic griev• tional security on their sovereignty. They year, just as they were in 2001 when Do• ances. That will be hard for the party, should swallow hard. nald Rumsfeld, then secretary of defence, which craves the legitimacy that comes severed them after that mid•air collision. from having seen o Westerners and the Time to choose Military•to•military contacts are not a re• Japanese. But it should eschew resentment After King Goujian won his famous vic• ward for good behaviour but an essential if it wants China to co•exist easily with the tory over the kingdom to the north, he so part of building trust. rest of the world. revelled in his power that he turned into ¹ Asia needs rules to help prevent mari• ¹ China and America should try to do as something of a despot. One faithful advis• time disputes from escalating. Collisions at much business as they can through multi• er ‡ed for his life, another fell on his sword sea, for instance, are much easier to man• national forums, such as the G20 and the at the king’s command. In the 1980s some age if the rules have been set out before• United Nations. Bilateral dealings are easi• Chinese writers saw this as an allegory for hand. Collisions are less likely to happen er and less time•consuming. But they are the cruelty of the triumphant Mao Zedong. at all if a code determines what counts as a opaque and they leave the rest of Asia There are many interpretations of King safe passage. In 2002 ASEAN and China wondering what is really going on. Noth• Goujian’s story. It can stand for vengeance, signed an agreement encouraging good be• ing builds the capacity of the system as despotism, self•improvement and much haviour in the South China Sea, but it has does using it successfully. else. Likewise, China’s rise is neither guar• been neglected. Only after the recent fuss ¹ Asia needs to sort out the thicket of re• anteed to be chie‡y about the prosperity did China show a renewed interest. gional•security organisations. With Amer• of 1.3 billion people nor condemned to be ¹ America and China need to talk now ica and Russia set to join as full members about antagonism or con‡ict with the rest about the things that look likely to lead to next year, the East Asia Summit looks the of the world. The future, like the story, is disputes later on. That means contingen• most promising place to become the re• what we make it. 7 cies for North Korea‹in secret if necessary. As Kenneth Lieberthal, of the Brookings In• O er to readers Future special reports stitution in Washington, DC, argues, it also Reprints of this special report are available from means talking about such issues as space Global leaders January 22nd 2011 the Rights and Syndication Department. Food February 26th 2011 and cyber•warfare. The two countries A minimum order of †ve copies is required. have put a lot of work into their Strategic Property March 5th 2011 Corporate o er and Economic Dialogue, but this tends to Editor’s survey: the role of the state Customisation options on corporate orders of 100 March 19th be dominated by the news of the moment. or more are available. Please contact us to discuss It should focus on the future. your requirements. ¹ America should abide by its own rules‹ For more information on how to order special and if it must break them, it should factor reports, reprints or any queries you may have in the real cost of doing so. America wants please contact: China to be prepared to live with the world as it is. If it breaks the rules, it will feed sus• The Rights and Syndication Department 26 Red Lion Square picions in China that, one way or the other, London WC1R 4HQ its rise will be denied. In terms of security, Tel +44 (0)20 7576 8148 keeping the rules means avoiding actions Fax +44 (0)20 7576 8492 that, in Mr Art’s words, appear Œpunitive e•mail: [email protected] Previous special reports and a list of and unprovoked. In economics it means www.economist.com.rights forthcoming ones can be found online avoiding protectionism, which is doubly Economist.com/rights Economist.com/specialreports self•defeating as it both undermines Chi•