Dealing with Assertive China: Time for Engagement 2.0

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map of China and its neighbors

This article was originally published by the Harvard International Review on 12 January 2016.

By all accounts, China’s rise as a great power has reached a new phase. In 2010, by nominal Gross Domestic Product (GDP), China overtook Japan as the world’s second largest economy, following stunning leaps over France, the United Kingdom, and Germany in the previous five years. Symbolically, this marked China’s arrival as the second largest global power. Concurrently, Chinese foreign policy has abandoned its earlier “lie-low, bide our time” strategy and turned assertive.

China’s rising challenge calls for a revamped American policy. To devise an effective response, we will need to be clear-eyed about the persistent drivers as well as the changing dynamics of Chinese foreign policy. We will also need to be clear on both the limitations and the adaptability of the past policy that has successfully facilitated China’s integration into the international system. Decades of China’s internationalization diminishes the prospect of war and tightens the place of China in the existing world order. But the two sides now seem stuck in a hapless state of strategic mistrust. America’s heightened concern over China is crystallized in the danger of what Professor Graham Allison calls the Thucydides Trap, the risk of war during a power transition typified by the Peloponnesian War between the rising Athens and the reigning Sparta. Chinese strategy analysts are acutely aware of the number two-power conundrum, as their country becomes the target of security fixation from the United States and its allies.

The rise of China is a twenty-first century challenge rife with both perils and opportunities, with complexity unparalleled in the great-power history. We may heed the warnings in the old pattern of history or structural model of theory, but the solution that befits our time is likely to be found in the new realities of the globalized world. If engagement is to align interests, preferences, and policies amidst differences and conflict towards some common goals under international anarchy and uncertainty, then it is a policy well equipped to deal with a changing China. With the agenda of strategic reassurance and global governance never more pressing than it is today, it’s time for engagement 2.0. Beyond the Obama Administration’s “pivot to Asia,” the United States needs to reset mutual expectations, agendas, and mechanisms of interaction to call on Beijing to buy in, and China must reciprocate if President Xi Jinping is serious about building a “new model of major power relations.”

The Rising China Challenge

Domestic preoccupation with the ruling Chinese Communist Party (CCP)-state security, sustained growth, nationalism, political and territorial defense of sovereignty, and great-power status are the persistent goals in China’s foreign policy. The global financial crisis accelerated the relative power shift in China’s favor and undermined the institutional and political authority of the post-cold war world order. But international events must be filtered through domestic politics to account for the real challenges posed by an assertive China.

The change started from home. In the past several years, Chinese politics has turned inward towards its own history and national conditions in search of a uniquely Chinese form of government. If his predecessor Hu Jintao’s “harmonious society” emphasized inclusive growth and social-economic justice President Xi’s “China dream” reflects an explicitly nationalist approach to politics. The national dream of prosperity and greatness can only be fulfilled with a uniquely suited Chinese style of governance under the CCP leadership. Constructed in contrast to Western multi-party democracy, the Chinese model emphasizes separation from, and often superiority to, Western political systems. Ironically, such political confidence fuels fear of Western conspiracy to start a color revolution, a cascade of popular uprisings that could bring down the communist regime. As a result, the current government has ratcheted up regulation over intellectual debate, political activism, civil society, and foreign non-governmental organizations.

As China becomes the second largest economy, its industrial policy is no longer just for catch-up development but favors the state sector and its own strategically important industries in order to improve national competitiveness relative to advanced economies. Beijing’s economic statecraft has shifted from a piecemeal policy tool to an explicit strategic instrument. China’s economic globalization is not simply a one-way street whereby it would adapt to the global marketplace and comply with the international regimes. The fact that many economies that are deeply dependent on China are also politically and strategically ambivalent towards the country has contributed to a unique set of security externalities that Beijing has to contend with. Beijing is hardly pleased that many of its economic partners turn to the United States for political support and security protection. As its economy grows stronger, China has stepped up efforts to leverage its economic prowess for diplomatic and strategic purposes. The global financial crisis decidedly facilitated China’s economic expansion abroad in trade, investment, finance, and even outbound tourism. That gives Beijing non-military instruments to punish trading partners for stepping over the line. More importantly, however, China has used its economic prowess to cultivate circles of friendly nations. Since 2013, President Xi has launched a well-coordinated program of economic globalization westward towards Europe on land and at sea, known as the Silk Road. While focused on Chinese investment in infrastructure development, the program is tied to the economic and geopolitical agendas of the next phase of China’s domestic and international transitions. As part of the plan, China has led the creation of multilateral institutions, such as the Asian Infrastructure Investment Bank (AIIB) with 60-plus inaugural member states, and BRICS Development Bank.

These efforts are not designed to build an exclusive China-centric block. They tap into the need for infrastructure financing, trade ties, connectivity, and global institutional reforms from Asia to Europe and throughout much of the world. The fact that China was able to get the Silk Road and AIIB initiatives off the ground so quickly says more about the logic of globalization than Beijing’s diplomatic acumen. China clearly has a complex domestic and international agenda behind these initiatives, and their implementation has been marred by obstacles from both fronts. But they have showcased China’s financial and economic prowess, which will sustain the next round of globalization. They also provide Beijing with platforms for its new revisionism vis-à-vis the world order. These efforts, if successful, could cultivate groupings of states beholden to China, offer an alternative to the West, and ultimately transform Beijing’s security and political environment in Asia and beyond.

Meanwhile, China’s international revisionism is shaped by both the hubris and the confusion of nationalism. The source of modern Chinese nationalism is the memory of the humiliation China suffered during the hundred years following the Opium War. But the Beijing Olympic Games in 2008 effectively turned a new page in Chinese nationalism. What China has experienced in world politics since then represents a far cry from the nation’s experience as a “sick man” in East Asia and a semi-colony brutalized by Western power and imperialist Japan. China has assumed the center stage in world politics, but is subjected to close international scrutiny. Ironically, China now finds itself becoming the target of popular nationalism from other countries, such as Vietnam and the Philippines. This has proven disorienting for a nation whose identity is heavily defined by victimhood. An “unhappy China” often complains it is unfairly called upon to fulfill international responsibilities. The ruling elites are particularly annoyed that China’s pursuit of what they define as its “core interests” in regime security, economic development, and territorial integrity are subjected to prejudiced international scrutiny. Far removed from its place of weakness, China today struggles to articulate a new national purpose befitting a truly great nation.

The unfamiliarity of great power status has contributed to China’s brash postures in the maritime disputes in East and South China Sea. As power shifted towards China, the modus operandi of shelving sovereignty issues became untenable. Following Tokyo’s nationalization of three Senkaku (Diaoyu) islands in 2012, China rejected Japan’s de facto administration of the islands on multiple fronts, including announcing its first Air Defense Identification Zone. In the South China Sea, China’s disputes have focused on Vietnam and the Philippines. Starting with seizure of the Scarborough Islands (Huangyan), China has upped the ante by moving oil rigs into Vietnamese-claimed territorial waters, scuffling over fishing rights and energy resources, and undertaking outright island constructions in South China Sea. All these activities raise questions about China’s intentions and concerns over freedom of navigation in the west Pacific.

For the Chinese, the flaring maritime disputes underscored the failures and inadequacies of its past neighborly policy in East Asia. In September 2013-14, the newly inaugurated Xi government took three steps that would herald the next phase of Chinese foreign policy. He personally convened a top leadership meeting devoted to China’s neighboring diplomacy, unveiled the “Silk Road” program, and called for Chinese great-power diplomacy.

China now is determined to set its own terms with an activist global agenda instead of having to “lie low” and answer to established authority and Western demand. On national security matters, President Xi wants China to enjoy equality with the United States and deference from smaller countries along its periphery. China’s growing power, assertive Asian diplomacy, and international revisionism have destabilized the historical status quo of the Sino-American relationship, the U.S. presence in the Pacific, and the existing world order. Just as China’s domestic politics have entered a new phase, so too has its foreign policy. The question is: how should the West, and particularly, the United States, react?

Towards Engagement 2.0

In the United States, policy prescriptions have run the gamut of containment designed to actively slow down, if not to stop China’s rise, to a G-2 partnership whereby the United States and China would somehow share global leadership. But if containment did not work in the past, it is even more anachronistic today. The G-2 idea, meanwhile, is equally unrealistic. Critics in Washington quickly shot it down lest the United States embrace the idea. The Chinese don’t buy it either; they see a trap in the frame to get their developing nation to shoulder US defined “international responsibilities.”

While a lot has changed, Chinese foreign policy has also demonstrated remarkable continuities. The singular force of integration in the global economy has sustained China’s pro-status quo bias. The Xi government has reaffirmed the national goal to achieve a well-off, middle class society by 2020 doubling both China’s 2010 GDP and per capita income. It has continued to turn to internationalization of the Chinese currency and the discipline as well as the opportunities of the global market to push through domestic financial reforms and support economic transition.

Critics of engagement tend to characterize the policy approach as being shortsighted and accommodative to China. However, US policy in the past several decades has undergone various permutations to deter Chinese aggressions and facilitate desirable changes. When called for, the United States has stepped up political, economic, and military pressures on China to simultaneously dissuade it from bullying its neighbors and encourage its integration into the international system.

Prior to the global financial crisis, China had overall moved towards becoming what former Deputy Secretary of State Robert Zoellick calls a “responsible stakeholder” in the global order. Heightened international concerns over China’s economic slowdown, currency depreciation, and stock market dive in the summer of 2015 only demonstrated that the world wanted China to do well. The United States also benefits from China’s success. The two economies are now so intertwined in finance, investment, and trade that they have what the Chinese call a “destiny community” of sort. In terms of trade, the US and Chinese markets now account for around 15 percent of each other’s total foreign trade, although the United States. continues to suffer a significant trade deficit. Over 90 bilateral institutions and mechanisms are in place to manage this complex relationship, including the decade-long Strategic and Economic Dialogue and the recently created official dialogue on people-to-people ties. Chinese President Xi stayed with an American family in 1985 in Muscatine, Iowa on an agricultural study tour, and his daughter is an alumnus of Harvard University. The Chinese government has since 2002 dispatched over 500 officials to Harvard Kennedy School for study and training. Such special ties are unparalleled in any dyad of great powers with such ambiguous strategic relations in history or present time.

But US policy must be recalibrated. In the past, engagement featured a US-led agenda setting, a singular goal of changing targeted Chinese practices, and enforcing international demands on China. Now, the two countries need to find a common agenda, be attentive to each other’s concerns, and broaden concerns beyond their bilateral relations and traditional security realm.

In this regard, the most notable achievement of President Xi’s first state visit to Washington in September 2015 was to infuse a spirit of new engagement, as the two sides showcased their continued partnership on climate change, worked through mutual complaints about market access, and managed to avert sanctions on China’s cyber-attacks in exchange for Chinese disavowal of state-sponsored intellectual property theft. On areas from global economic balance to CO2 emissions to cyber-security, the United States and China are often the two biggest players. They could greatly harm each other and abort any international cause for problem solving or preserving global commons, if each is concerned only about relative advantage or refuses to budge on traditional stands. During President Xi’s visit, the two sides showed a commitment to proactive management of differences. On cyber-security, the Chinese subsequently announced the arrest of the individual hackers allegedly responsible for the massive US Office of Personnel Management data breach. Furthermore, the two sides created a regularized bilateral ministerial dialogue, which was inaugurated on December 2, 2015, thus providing an institutional setting to address the unregulated and deeply divisive issue. At the global level, thanks to their joint efforts, an international norm prohibiting state-sponsored cyber industrial espionage started to take shape at the G20 Summit in Antalya, Turkey in November 2015. Instead of looking for a grand bargain or making some joint statement to define the relationship, this method of managing problems signals much needed strategic reassurance and sense of shared global responsibility.

With the early phase of China’s international integration over, Beijing now demands representation, deference, and leadership in the world. The question is whether or not the United States and China can agree on a roadmap of representational adjustment in line with a common agenda and mutual obligations on a myriad of global issues. During President Xi’s visit, the two sides articulated a broad agenda seeking to harness China’s international aspirations and activism for bilateral cooperation on new areas such as the rebuilding of Afghanistan and Iranian nuclear proliferations. This agenda remains tentative and limited, but it was certainly a step in the right direction. The International Monetary Fund Executive Board’s decision on December 1, 2015 to include RMB in its Special Drawing Rights reserve and the U.S. Congressional ratification of the Fund’s 2010 Quota and Reforms in the same month speak to a resilient adaptability of the contemporary global status quo to changing power configurations.

Most notably, however, the two countries failed to address the issue concerning how to construct a mutually acceptable security order in the Pacific. President Xi has reiterated that China has no intention to drive the United States out of East Asia. However, his Asian security vision as laid out at a multilateral security conference in Shanghai on May 21, 2014, seemed to call for an Asian security architecture excluding the United States. During President Xi’s state visit, the United States and China reaffirmed their efforts to improve preventative crisis management between the two militaries in the west Pacific. US Navy ships have since sailed into the territorial waters of China’s newly built islands to uphold freedom of navigation as they have done against other contestants in the South China Sea in the past. As a trading state, China has benefitted from the open sea lanes, and Beijing must understand it is also a key mission of the US presence in the Pacific.

No one should underestimate the challenges ahead. China’s difficult economic transition, growing international activism, maritime disputes, and enforcement of political sovereignty over its multi-ethnic society and the greater China units of Hong Kong and Taiwan all pertain to Beijing’s “core interests.” The specter of traditional power politics has returned to cast a shadow on its great-power quest. China’s turn inwards in domestic politics and President Xi’s strong man-style politics could also have grave consequences for the nation’s foreign relations.

Paradoxically, amidst the growing rivalry between the United States and China in Asia, there is an even greater imperative and a stronger foundation than ever for their mutual engagement to succeed. Economic internationalization has created a multifaceted and deep interdependence of interests between China and the rest of the international community. Equally, if not more importantly, it has globalized China’s worldview to the extent that violent confrontation against the international status quo is largely implausible and unthinkable.

The path towards strategic trust, global partnership, and lasting peace in the Asia-Pacific remains uncertain. In particular, Asia is beset by territorial disputes, competitive armament, contending regional designs, and pervasive sense of insecurity. These challenges should set the agenda for enhanced Sino-American mutual engagement during the next phase of China’s rise.

Yong Deng is Professor of Political Science at the U.S. Naval Academy at Annapolis, Maryland.

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