Policy Abroad Needs Work

China’s increasing influence demands our attention
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At first quietly, a group of us has been working to build a world-​class institute at the University of Pittsburgh that analyzes emerging security problems and opportunities. Working closely with the U.S. military and key policy experts, the Matthew B. Ridgway Center for International Security Studies investigates rapidly emerging and evolving threats.

One of the issues we’re focusing on most intently is the rise of China and the implications for the United States. Over the past three years, the Ridgway Center has convened specialists to consider whether the rise of China will continue peaceably, as China’s leaders insist it will.

It’s clear that Asia’s balance of influence is shifting on all fronts — economically, militarily, technologically, diplomatically and politically. And the pace of change is accelerating, as Asia casts off Cold War Western influence and control and prepares to exert its muscle. China will figure prominently in this realignment. Already, many perceive that the balance of influence between China and the United States in Asia is shifting decidedly in China’s favor. Our group at the Ridgway Center focused on what the United States should do about it, and this article highlights our findings, which will be published next year by the University of Pittsburgh Press in a book titled, “China’s Rise and the Shifting Balance of Power in Asia.”

Our discussions produced a surprisingly tight consensus. China’s emergence as a regional military power and global economic player calls for a coordinated U.S. response on many levels. It is now abundantly clear that neither the Clinton nor the Bush administrations have responded to the rise of China in proportion to its size and significance. Perhaps the scale and permanence of China’s new position was not yet sufficiently clear to elicit a sustained response from the Clinton policy team. More recently, an overwhelming focus on the twin issues of the “war on terrorism” and the occupation of Iraq have diverted the Bush administration from rethinking Asian policy. Whatever the causes, recent U.S. administrations haven’t come to terms with the magnitude of economic and political change accompanying the emergence of a new economic superpower in Asia.

Despite this unfortunate policy neglect, Asia’s primacy for American interests is beyond doubt. Asia has become our largest economic partner: U.S. merchandise trade with Asia, for example, was approximately $776 billion in 2004 compared to $506 billion with Europe for the same year. In the security field, Europe responded to the end of the Cold War by reducing military expenditures, while Asia expanded both conventional and nuclear defense spending. Beginning in 1999, China’s military budgets regularly exceeded those of the major European powers. And in 2003, the last year statistics are available, China’s and Japan’s defense budgets reached $56 billion and $43 billion, respectively, compared to $35 billion, $46 billion and $43 billion for Germany, France and the United Kingdom.

China’s impact will grow

Three decades of unprecedented economic growth have injected an enormous array of knowledge and skill into China’s economy. Economic advancement remains the primary goal of Chinese leaders at every level, and we expect China’s economic and military importance to continue its ascent. China does face enormous challenges as it struggles to rapidly industrialize, but its economy is poised to extend its formidable gains. China’s decision to open its doors to international trade and investment has contributed mightily to the growth of manufacturing capabilities. And inflows of technology will continue, with the reform of Chinese institutions and the erosion of international restrictions on sales of semiconductors and other advanced items to the People’s Republic. China’s own advances in science and technology, which are delivering results in biotechnology and pharmaceuticals, will add fresh impetus to the search for higher productivity.

With Beijing’s military spending pulling ahead of Japan’s, Chinese strategists are expanding their views of their nation’s defense interests. This is clear in China’s growing manned and unmanned space exploration, the acquisition of mid-​air refueling capability and the growth of military capability in and around the South China Sea, the Straits of Malacca and the Indian Ocean. Direct and indirect consequences of China’s defense modernization ripple across Asia-​from a reexamination of Japanese military posture to development of nuclear forces by India, Pakistan and North Korea. All of China’s neighbors, from Taiwan and Vietnam to more distant states such as Japan and Indonesia, follow Chinese military developments with the closest attention.

How will the world react?

Although divided by historical enmities, many Asian nations are paradoxically rushing toward integration of trade, manufacturing and investment, both regionally and globally. Trade optimists envision a golden age of inter– and intra-​Asian trade and investment, building on numerous regional and bilateral free trade agreements. As Harvard’s Alastair Iain Johnston puts it, with the exception of the Taiwan issue, China is more open to existing international institutions and to “U.S. dominance of the international and regional power structure than at any time since 1949.”

Security pessimists point to China’s growing military budget and extensive plans for force modernization, made possible by the long cycle of economic expansion. The U.S. — China Economic and Security Review Commission argues in its most recent Annual Report to Congress that “on balance, the trends in the U.S.-China relationship have negative implications for the long-​term economic and security interests of the United States.”

But it would be a mistake to overemphasize Chinese military modernization. China’s military ambitions appear to be limited and not aimed at global force projection. China’s military build-​up focuses on protecting borders, controlling territories (including Taiwan and Tibet), increasing troops’ pay and expanding power projection in what might be termed China’s “near abroad.” And strong economic ties beget diplomatic influence, which can benefit the United States. For example, both America and China muted confrontation over the April 2001 spy plane incident when they sensed danger to economic links. At the same time, China’s expanding trade and investment relationships have undercut U.S. influence, as Asian nations consider China’s mounting capacity and obvious willingness to apply economic leverage in support of its diplomatic objectives.

During the past three decades, Japan — as Asia’s techno-​economic powerhouse and the world’s second-​largest economy — has clearly dominated regional economic and political interaction. But if we focus on the past decade, the picture changes. The rise of South Korea, Taiwan and China, together with Japan’s economic malaise and political paralysis, makes Asia appear more decentralized. Looking 10 years ahead, will China’s growing prominence shift Asia’s political and economic fulcrum from Japan and the Korean Peninsula toward Beijing and China’s high-​growth coastal provinces?

If this comes to pass, then we can envision a more provocative scenario that goes beyond China’s economic dynamism. Since the end of the World War II, the United States has been the leader and primary proponent of economic liberalism, but this may be because interdependence was always construed to be favorable to U.S. interests. The United States could always threaten to close its borders to trade and investment. With China being a formidable economic power, will the United States continue to champion free and open trade, unfettered capital markets and economic interdependence? Will it do so even in the face of Chinese manufacturing strength, extensive outsourcing of production and services to China and India and the rise of a massive, technically literate Chinese workforce?

Although estimates vary widely, China will graduate 350,000 to 951,000 engineers in 2006, an indication that China is rapidly developing the educational and industrial infrastructure to attain great power in the early decades of the 21st century.

In such a future, the United States would not be the only economy that affects the entire world. (“When the United States sneezes, the rest of the world gets a cold…”) China’s influence is expanding in many areas including energy, minerals, cargo space, steel, garments and semi– conductors. Its economy is already so large that its cyclical movements, like those of the United States, can initiate powerful global ripples. When lesser states confront a world in which global prosperity and balance follow the lead of two huge economies, America’s and China’s, fundamental challenges to the U.S.-centric order could emerge.

To promote global economic stability, are we willing to accept a bilateral architecture that recognizes China’s growing economic size relative to America’s?

A considerable body of opinion says that the “peaceful rise” of China cannot be taken for granted, even though China is thoroughly enmeshed in the complex economic and political interdependence of the global economy.

Our group at the Ridgway Center concluded that China’s economic security is likely to rest more on international cooperation and commercial diplomacy than military strength. China continues to expand its military to protect its borders, support its claim to great power status and, above all, strengthen its leverage over Taiwan. But despite recent military expansion and expected modernization, China’s armed forces provide no defense against the most likely external threats to continued Chinese growth: disruption of global trade in energy and other raw materials, global recession and reversal of recent trends toward liberalization of global trade and investment flows.

A sweeping reconsideration of United States-​China policy is long overdue.

Global as well as regional economic changes will be needed to accommodate China’s new position. Even a ‘peaceful rise’ of China is likely to be costly. The United States, Europe, Taiwan and Asian neighbors will have to make painful adjustments to manage China’s arrival as a consumer-​oriented, technically astute economic superpower. And it isn’t clear that existing global economic arrangements are sufficient.

For this reason, a sound foreign policy toward China would emphasize the mutual benefits of economic interdependence. In recent decades, due both to the deterrent capabilities of nuclear weapons and the benefits of expanded trade and financial relationships, international relations among the world’s leading states have become progressively less concerned with military power.

Economic interdependence gives different nations common goals, principally economic growth and expanded social security. The trend is away from confrontation and toward more orderly systems of open markets and trade. The theory is that a rising tide lifts all boats.

Clearly, the status quo in Asia is shifting as China’s long economic boom begins to approach critical mass. In response, U.S. policy must engage China at all levels. We need to analyze the likely trajectory of China’s economy, military and policy aims. We must consider the impact of these tendencies on our objectives and interests. We then need to determine where and how United States policy initiatives might steer China’s development, Beijing’s policies and its interaction with Asian nations in directions more favorable to the United States.

These changes are not simply responses to events in China, but broad realignments of economic, technological and business structures as well as political and security arrangements. The United States response to China’s ascent should include indirect consequences such as strengthening military ties between the United States and Japan, India, Singapore and Indonesia, as well as growing interest in bilateral and multilateral free trade arrangements on the part of Japan, Korea and India. We should also strengthen military-​to-​military contacts between China and the United States and deepen cooperation, reinforce confidence and increase security-​building measures.

We need a consistent, coordinated, comprehensive and constructive foundation for future Asia policy to supplant the ad hoc and often inconsistent policies of the past 15 years. This is critical because Asia’s influence on the United States economy and global markets has expanded massively and will continue to grow. If trends continue, the scope and sophistication of Asian innovation systems will continue to deepen, enhancing Asian economic performance as well as military strength relative both to the European Union and the United States

Even as Washington enunciates a national security policy founded on “promoting freedom, justice, and human dignity” and “leading a growing community of democracies,” and focuses implementation on the Middle East and Islamic world, the Chinese are busy pursuing diplomacy intended to configure relations in the Pacific basin in their own, apparently more pragmatic interests.

Given the importance of the Asia-​Pacific region to future peace and prosperity, the United States must develop a consistent long-​term policy toward Asia, emphasizing key commercial and military objectives and instituting a coordinated strategy to embrace the “peaceful rise” of China.

William W. Keller & Thomas G. Rawski

William is the director of Matthew B. Ridgway Center for International Studies at Pitt, where he is also the Wesley W. Posvar chair in international security studies. He is a co-​author with Thomas of “China’s Rise and the Shifting Balance of Influence in Asia.” Thomas is a professor of economics and history, specializing in the Chinese economy.

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