Symposium: China: Time Bomb Walking

As President Bush met with Chinese President Hu Jintao at the White House this week, the issue of China’s rise as a global superpower took center stage. Serious concerns are mounting in Washington in regards to China’s increasingly aggressive global posturing. Indeed, Beijing continues to militarily threaten Taiwan, to support a nuclear North Korea, and to forge alliances with anti-American regimes everywhere, including with Venezuela’s Hugo Chavez and Iran’s nuclear-aspiring Mullahs.

As the military and economic threat of Beijing becomes increasingly apparent, the question arises: were we complicit in creating this communist monster? If we were, what can and must we do now to reverse course? And whatever happened to economic liberalization leading to democratization – as many optimists had predicted would happen? Did the formula simply not work? Did the capitalist success of the economy simply just strengthen the power of the dictatorship? Or will there be some kind of democratic explosion at some point in the near future?

Whatever the case, the reality now is that the communist giant poses a serious military threat to our allies in Asia -- and to us. Its economic policies, all the while, are significantly undermining our interests.

What can we expect from the Chinese threat in the near future? And what can -- and what must -- we do about it?

To discuss these and other questions with us, we are honored to be joined by a distinguished panel. Our guests today are:

Arthur Waldron, Professor of International Relations in the Department of History at the University of Pennsylvania. He was trained in Chinese language and History at Harvard, spent a number of years living in Asia, and has visited China dozens of times since the 1970s.

Gordon G. Chang, the author of The Coming Collapse of China. He has lived and worked in China and Hong Kong for more than two decades.

Ethan Gutmann, author of Losing the New China: a Story of American Commerce, Desire and Betrayal. A former visiting Fellow at PNAC, and a former Senor Counselor at APCO China. He received the "Spirit of Tiananmen" and "Chan's Journalism" awards in 2005.

Kin-ming Liu, currently a freelance columnist based in Washington, DC., writing a bi-weekly column for Insight for the News and writing a weekly column for The Standard, an English paper in Hong Kong. Until recently, he was the US Political Columnist of Hong Kong's Apple Daily.

FP: Arthur Waldron, Gordon G. Chang, Ethan Gutmann and Kin-ming Liu, welcome to Frontpage.

Perhaps to crystallize the key issues involved, it might be best to start with U.S. policy and what it hopes to achieve in China.

Dr. Waldron, what would the U.S. like to see there? And is what we need to do to make it happen?

Waldron: If we look back at the history of US China policy since the early 1970s, we see three distinct phases. The first was begun by President Nixon and concluded by President Carter. During that period we were preoccupied with the power of the Soviet Union. Our impending defeat in Vietnam persuaded them that we could not deal with the USSR alone. We needed a counterweight--and China was the obvious one.

Of course China felt threatened by Moscow too: otherwise no agreement would have been possible. But as the diplomacy played out, it became clear that the United States felt more urgency, was less skilled at bargaining, and more willing to make concessions than China. The eventual result was the agreements Carter made in 1979 that established full diplomatic relations with China, broke all of our official relations with Taiwan (our treaty ally since the early 1950s) not even acknowledging any longer that it was a state having its own government, and ushered in an unprecedented degree of intelligence cooperation with China, perhaps most importantly through advanced monitoring posts near the Soviet border in Xinjiang.

Both Nixon and Carter were advocates of human rights. Yet neither seemed at all concerned about the rights of the Chinese people. They knew that China was a communist dictatorship comparable to the Soviet Union. But somehow they saw it through different eyes. I have always felt they never got beyond the fact that the people who live there were "Chinese" -- having a difficult ideographic language, distinct culture, seemingly uniform appearance, etc. -- they never got beyond all of that to grasp that they were also people having the same rights as any others. They also believed that Mao had somehow solved China's problems and that the system they saw would endure.

So that was the strategic partner phase. Next came the China will change phase. Reagan shifted attention away from Beijing and undid some of the damage to Taiwan. He focused on the USSR directly, calling upon Mr Gorbachev to tear down the Berlin wall, and making clear that the United States no longer felt so weak as she had in the 1970s. The result was of course astonishing change in Eastern Europe--with the Berlin Wall actually coming down and Communism ending in the USSR in 1991.

The democracy movement in China fed hope that China too would change. Already all sorts of economic change had been begun after Mao's death in 1976. But no serious institutional change took place or has taken place up to the present. Private property is not guaranteed, law and justice do not exist -- instead the Party decides what is to be done --and no genuinely significant steps have been taken toward democratization or freedom of speech and conscience.

Nevertheless, during this period the hope and expectation in Washington was that China was going to change -- and become more tolerant, liberal, and so forth, even democratic. Clinton ran on a ticket of supporting democracy in China.

This was a phase during which change had not occurred, but was so widely expected that we acted as if it had, lifting restrictions, pouring in investment, soaking up exports, etc.

Now we are in the third phase. China has reaped the benefits of American policies. Her government is rich and many Americans and other westerners now have so much money invested in China that they are reluctant to do anything other than support the regime. Yet it is becoming clear that the Communists have no intention of giving up power, allowing free speech, elections, freedom of religion, or other serious change. It is also becoming clear that economically China is mercantilist in her behavior, not a true free trader. And finally, she is using the money and access to foreign technology obtained in these decades to engage in a major military build-up.

This is the phase in which we find ourselves now. I think we can call it dawning disappointment and concern. Without intending to, we have helped create a formidable geopolitical competitor, that threatens our friends and allies in Asia militarily, and whose economic behavior is undermining our interests. That competitor now feels strong enough not to pay much attention to what we say, one way or the other. Beijing feels it can make its own way.

I believe our interest is above all in having a China whose government is legitimately constituted, elected by its people, and that honors the rights of its people. This is the fundamental consideration.

Our policies, paradoxically enough, seem in fact to have strengthened the dictatorship, or at least its determination not to reform, and paid for a major arms build up.

Gutmann: Given Arthur's summary, I would only add a point of emphasis. In the mid-nineties, following President Clintons' retreat on linking human rights to business engagement, American business interests have essentially held the whip hand in American foreign policy towards China.

There's nothing conspiratorial about this; as Arthur suggests, US policymakers have never held a particularly unified or coherent view of how to handle China's rise. Business does. They see an incredibly entrepreneurial people who are interested in profits, just like them. This mirror-imaging - really a sort of euphoria - has colored the American business view of international relations as well. Fukiyama's end-of-history essay stated what American businessmen intuitively knew already: interdependence and globalization would effectively end large-scale state-to-state conflicts.

It's a shaky theory (Europe had a high rate of trade on the eve of World War I; Palestinians have a high rate of interdependence with Israelis and so on), and it is interesting that Fukuyama employed China as a key example of the defeat of communism, while assuming that the vital elements of fascism had also been defeated, by the middle of the 20th Century. Yet China's transition from communism to capitalism – what businessmen see - can also be interpreted as a transition from communism to fascism.

Now, I don't take that term lightly. And I am not using it as an epithet, but as a description of recent trends: for example, the recent reports on the Sujiatun death camp, where doctors reportedly harvest 6000 Falun Gong practitioners for collagen, skin, and corneas. Or that the Chinese interest in trade stability doesn't seem compatible with the missiles aimed at Taiwan. Or that the Chinese are currently buying oil assets at a rate that does not indicate confidence in the continued existence of a spot market - in other words the Chinese Communist Party is planning for a world that is not interdependent.

None of these trends would survive free elections in China. So, as Arthur said, that is clearly in the US national interest, but we no longer have a road map. The Chinese Internet as a training ground of democracy has been effectively blocked. The village elections are a fig-leaf. "Rule of law" has taken us nowhere and as, Arthur pointed out, our leverage is decreasing. The US business vision of inevitable Chinese political reform through a rising middle class has not been proved wrong, not yet, but it is no longer in the US national interest to passively assume it either.

Liu: As a long-time student of US policies and attitudes towards China, I am always amazed at one enduring element I call the China Exception. Presidents can come and go; Congress can be led by either the Democrats or the Republicans; but China has always been viewed with a special eye by Americans.

The United States, the bastion of anti-communism during the Cold War, considered the Russians to be wicked and dangerous. The Chinese, somehow, were seen as more benign and misguided. In other words, the Russians were bad communists while the Chinese were good communists. US attitudes toward China swing between love and skepticism but the Soviet Union was always considered the bad guy. What's more, the Soviet Union didn't have Fortune 500 acting as its lobbyists like China does. Gutmann has talked about this in great details in his book so I don't have to repeat it here.

Even George W Bush, the most revolutionary US president since Ronald Reagan, does not seem totally immune to this romanticism about China. The Bush Doctrine seems to be applicable to anywhere else but China. Washington apparently is not pursuing these policies towards Beijing. Imagine the U.S. trying to tell Hitler's Germany or Stalin's Soviet Union to become a "responsible stakeholder" as the Bush Administration is doing now. It doesn't make any sense.

I understand the U.S. is busy with Iraq and certainly doesn't want more trouble elsewhere. But not being straight about China is only inviting big trouble later, especially on the Taiwan Strait.

FP: Mr. Chang, what do you think of the “China Exception” and the other comments made the guests?

Chang: Beijing has indeed benefited from exceptional treatment from Washington as both Arthur and Kin-ming note. A consensus about China has underpinned American foreign policy for more than a decade. Policymakers have believed that our engagement of Beijing would lead, if not to a more democratic China, then at least to a more benign one. Therefore, Washington’s goal has been to integrate China into the international community. The concept is simple: if we extend a hand, they will respond.

As a result of our indulgent approach, we have helped Beijing and even overlooked irresponsible conduct in the hope that China would eventually evolve. Over time, however, we inadvertently created a set of perverse incentives. The Chinese engaged in bad behavior. We provided benefits in the hope they would change. So they continued their irresponsible conduct. We continued to reward them. In these circumstances, the Chinese naturally became more assertive than cooperative.

Now, however, the general consensus toward China is starting to break down. And as trade frustrations mount, geopolitical concerns will come to prominence as well. It is becoming increasingly clear that China is an obstacle—and perhaps the main obstacle—to America achieving its most important objectives, such as preventing the nuclearization of Iran or the disarming of North Korea. The warming ties between America and India are significant because they signal Washington’s frustration with Beijing. The subtext is that the United States cannot significantly modify China’s behavior so it will turn toward the democratic states in Asia. This could be the first visible step to changing the general approach of engaging the Chinese and ending the "China Exception."

The ending of exceptional treatment could have severe consequences for the Communist Party. The stability of the modern Chinese state depends on prosperity, and that prosperity depends in large part on access to foreign markets and capital. Anything could happen inside China if either were restricted or denied to the Chinese for extended periods.

Gutmann: I agree with Gordon's analysis, yet I can't help feeling that Washington, and even the U.S. defense establishment, is still in denial. Improved relations with India won't significantly complicate China's defense planning in the near term. Similarly, domestic and external political constraints on Japanese re-armament make any real defense interoperability with Japan's defense forces strategically negligible at this time.

Alliances are useful and they make us feel better, but they are not a substitute for broad-based strategic attention to China's rise. Where is the focus in Washington on oversight of American corporate research and development based in the mainland? How, in a crisis, do we maintain escalation dominance when China's force structure is purposely asymmetric, focused on U.S. weak points, rather than matching the U.S. system for system?

How "Cold War" that last question sounds. Yet I think that's part of the trouble; the China Exception's current form is the belief that by asking Cold War-style questions we will create a self-fulfilling prophecy. Chinese strategic thinking has no such constraints. And it should be pointed out that we allow military exchanges with the PLA (despite the one-sided gains by Chinese intelligence) precisely because we developed certain theories about "crisis stability" during the Cold War. I'm not against the military exchanges, but comprehensive strategic planning happens to involve a lot of worst-case scenarios as well.

Liu: I'm getting quite pessimistic and am afraid the China Exception is here to stay. I can't shake off the following grim picture from my head. When China finally invades Taiwan and the U.S. is deciding how to respond, Taipei shall be condemned even more than Beijing by many opinion leaders in this country. Taiwan would be criticized as having unnecessarily provoked Beijing into war. I tend to agree with Gutmann that most of Washington is in denial when it comes to China. Somehow, it's hoped that engagement would take care of the problem. Chang's summary of this attitude -- if we extend a hand, they will respond -- is sadly true.

I must plead guilty of being stupid enough to have once believed this myth: economic openness would lead to political liberalization in China. I'm ashamed to admit that, five years ago, I supported granting the communist state Permanent Normal Trade Relations status. PNTR then smoothed the way for Beijing to become a member of the WTO. With hindsight, I was totally misguided.

I am, of course, not blind to the tremendous changes that have been taking place in China. There's little doubt that, for most of the Chinese people, China is a less brutal country than before. However, behind the glittering skyscrapers and the other signs of modernity, China today is still dominated by one salient fact: the core of the regime remains unchanged, and it will do whatever is necessary to maintain its iron grip on power.

The panda huggers' Achilles heel is Taiwan, an issue which is always conveniently ignored. Once the Taiwan Straits—a flashpoint where American GIs getting killed by the People's Liberation Army remains a real possibility—is introduced into the discussion, it would make all the rosy talks on China sound hollow. People inside China may get a bit more non-political freedom as their country is trading like crazy with the outside world. However, Beijing now is more and not less determined to "liberate" the island democracy through the use of power as the regime is being enriched by the international business community, with Americans playing a significant role.

Chang: Washington extended exceptional treatment to China because America did not feel threatened by Beijing. As the sole superpower, the United States felt it could afford to continue to engage the Chinese, even when they acted in irresponsible ways.

Yet America no longer feels secure and soon will not feel confident. We are beginning to see China not just as a challenger to us but as a threat to global order. China, for instance, is not only supporting rogue regimes but also allying itself with an increasingly assertive and unfriendly Russia. We can see the beginnings of a new bipolar world order in which America is not the predominant power.

As a result, the United States will no longer feel that it can accommodate unjustifiable Chinese conduct. When perceptions in America change, all we know about the current geopolitical landscape will be obsolete. One consequence of the change in perceptions will be that the business lobby in America will lose much of its power to support Beijing--security concerns always trump economic ones once Americans feel their lives are at stake. Soon, Ethan will not sound so "Cold War" and Kin-ming will not feel so pessimistic.

If the past has taught us anything, change, once it comes, will be swift and unpredictable. The great challenge for America is to recognize change and manage it in time. I am confident that, despite indulgent policy in the past, we will. We will because we will have no choice if we want to have a future.

Gutmann: In keeping with the more optimistic tack of the conversation, I'll confess that I was surprised by Congressional determination to scuttle China National Offshore Oil Corporation's bid to buy Unocal.

To be sure, the Chinese had exquisitely poor timing; you don't threaten America's oil supply – however obliquely, however far in the future - during a news vacuum. In fact, the biggest news at the time was high prices at the pump. And certainly chronic concerns such as WTO compliance, the trade imbalance, counterfeiting, and corruption have begun to add up.

Now I was in Taiwan when the Unocal controversy flared up, so maybe I'm wrong in my next speculation. But at the time, I wondered: was Congress was beginning to recognize that China's oil acquisitions are not just the result of the CCP planning for a rainy day, but planning for a world where the spot market in oil has been replaced by a system where oil is sold under the barrel of a gun? Now it's certainly possible to interpret the CCP's actions as simply prudent, but it's also possible to ask: does the CCP know something about the future that we don't? And do they believe that they control the timing of that future?

At the very least, Congressional action over Unocal indicated a new sense that China's trade strategy is not just nationalist - but in some still not-quite-defined way, malevolent.

Liu: I certainly hope Chang is correct. And the example cited by Gutmann certainly is somewhat encouraging.

And yes, "hedging" against China appears more these days in discussions in Washington. In other words, the main line of U.S. policy towards China is still deputy secretary of state Bob Zoellick's "responsible stakeholder" -- encouraging China to become one. But just in case it doesn't work, the U.S. would also have other arrangements to hedge against a future enemy. This due theme is an improvement over the sole stakeholder talk.

My problem with this strategy lies with the order of things. It should be the other way around, i.e., to hedge against China first and then try to change it to a stakeholder. All signs point to the fact that China is already an enemy, not strong enough yet to pose immediate dangers to the U.S. at this point perhaps, and will only gain more power as time goes by. The U.S. should plan its policies based on this fundamental understanding. Since no one wants to have a shooting war with China and serious efforts should be put into avoiding one, Washington therefore at the same time should also try to encourage China become a responsible stakeholder. But the priority should be crystal clear -- treat China as an enemy first and then try to change it into a friend later.

Otherwise, the current strategy is contradictory. Being nice to China and hope it would become a friend will only empower a China which the U.S. is also hedging against. Washington is helping to create a stronger China to hedge against. It doesn't make any sense.

I'm all for China becoming a responsible stakeholder, if it can be done. However, I simply fail to see how the current policies would achieve this end.

Chang: As Kin-ming implies, we could be creating a new Soviet Union. So we certainly need realistic and resolute policies. America was relatively quick to recognize the challenge posed by the Soviets after the Second World War, but that was because the challenge was unmistakable. The Chinese challenge, on the other hand, is more subtle. Yet just because it's discreet does not mean that it is less of a challenge. We need a generation of leaders who will follow in the footsteps of giants like Harry Truman and George Marshall. And Reagan too.

One final point: it's important to remember that, although China may project a strong image beyond its borders, the People's Republic is essentially a weak state. The Communist Party is aggressive abroad, but it's also vulnerable at home. We can help the Chinese people transform their society for the better. So let's engage the Chinese government less and the Chinese people more. That would be the principled--and smart--thing to do.

FP: Arthur Waldron, Gordon G. Chang, Ethan Gutmann and Kin-ming Liu, thank you for joining Frontpage Symposium.

Liu: I'm getting quite pessimistic and am afraid the China Exception is here to stay. I can't shake off the following grim picture from my head. When China finally invades Taiwan and the U.S. is deciding how to respond, Taipei shall be condemned even more than Beijing by many opinion leaders in this country. Taiwan would be criticized as having unnecessarily provoked Beijing into war.

This is happening right now and at the highest levels of the current administration.

It is disconcerting and disillusioning.

You're very welcome.

This is happening right now and at the highest levels of the current administration. It is disconcerting and disillusioning.

Agreed...it's a form of cognitive dissonance. Where when reality fails to conform to our visualization of it...we rationalize and instead of correcting for the discrepancy in our understanding of the reality, we further delude ourselves.

This erosion of the U.S. ability to political assert self-interest is indeed happening.

Which completely refutes the position that Poohbah always so stridently made here.

I think some of the questions posed are very much on the mark:

On complicity, I think we were complicit in creating this communist monstrosity: even now, most of the profits that the PRC receives from its massive international trade are from us. Worse, some of our largest companies are direct collaborators in the repression of the people under Beijing's rule.

As to what to do, I think that the only way to reverse course is to revoke all normal trade relations with the Chicoms. I don't know if that will be sufficient, but I think it is wrong and foolish of us to continue to build Red China up.

The world economy is moving to the Pacific Rim;

Because we are pushing for that. What if we pushed for a return to sanity instead?

we either become players in that economy or convert to the Euro.

That doesn't follow. The U.S. is the Big Enchilada...and would stay that way if we didn't abdicate our manufacturing supremacy for doctrinnaire ideological reasons...or catering to temporarily more-powerful special interests. Example: England went whole-hog for Free Trade...and thought their economic supremacy would last forever. The Free Traders were, however, proven definitively wrong. Free Trade destroyed their advantages. Some telling observations therein:

"The decline of England has always been a favorite for this kind of analysis. As the prominent commercial lawyer and judge Lord Penzance warned in 1886, "The advance of other nations into those regions of manufacture in which we used to stand either alone or supreme, should make us alive to the possible future. Where we used to find customers, we now find rivals....prudence demands a dispassionate inquiry into the course we are pursuing, in place of a blind adhesion to a discredited theory." The "discredited theory" to which Lord Penzance was referring is "free trade." England had adopted this doctrine when it had a substantial lead in the Industrial Revolution and wanted to open foreign markets for its exports. But as conditions changed, its leaders clung to policies that no longer fit world affairs.
British historian D.C.M. Platt [Finance, Trade and Politics in British Foreign Policy 1815-1914, Oxford University, 1968] has argued that the leaders of Victorian England were so devoted to "free trade" that they were willing to sacrifice their direct interests to this intellectual ideal. Another British historian, Keith Robbins [The Eclipse of a Great Power: Modern Britain 1870-1975, Longman, 1983] has written, "To a few contemporaries, this devotion was perverse. It seemed obvious that the world was not following Britain's Free Trade example. Germany introduced a measure of protection in 1879, France in 1882 and the United States in 1883 and 1900....But there was no British retaliation."
The failure to adapt in a dynamic world is a central weakness of thinking bound by ideology; i.e., the belief that some doctrine is so perfect that it fits all times and places. Such blind faith can lead people to reject another idea they know will work, because it does not fit their misplaced "values."

Empirically, these are just unassailable facts. I further commend to your attention Kicking Away the Ladder: The “Real” History of Free Trade" by Ha-Joon Chang (Prof. Econ, Oxford University). Now on to your other points.

Despite the connection, I think England is fairly well placed to participate if it uses it's relationship with Australia and New Zealand.

They already do. What's left of the old UK is, however, no longer a preferential enclave. England's ideological conspiracy to keep it locked into free trade...destroyed it as a super power. And will keep it down.

And it is and will do the same to us...as we now stagger economically under a military burden which isn't even half of what Reagan deployed just 26 years ago...

It is also important to stress here what the experts above acknowledge...but John Snow, Sec.Treasury doesn't, that China is not pursuing Free Trade itself. Quite the opposite. But it does insist that WE practice 'Free Trade'...

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