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How to Think About China: A Threat? A Partner? A Competitor?

September 1, 2010

Napoleon was uncommonly prescient more than 200 years ago when he described China as “a sleeping giant.” He added, “When it awakens, it will astonish the world.” As we all know, the Chinese, after a couple of bad centuries, are again wide awake.

Beijing Street Scene

China, which recently surpassed Japan as the world’s second largest economy, has increased its GDP at a rate of roughly 10 percent per year.

The tale of China’s recent “rise” is laced with dazzling statistics. In more than 30 years China has increased its GDP at a rate of roughly 10 percent per year, recently surpassing Japan as the world’s second largest economy.

As a global manufacturing hub, China is an exceptionally efficient producer of steel, ships, chemicals, and an amazing array of consumer goods. Its share of global trade has increased ten fold since 1978, and this year it supplanted Germany as the world’s largest exporter of goods.

For decades Beijing has been sending tens of thousands of its “best and brightest” abroad to study math, science, and engineering. It is now undertaking a major upgrade of its universities and research centers in order to train the human resources needed to become a world leader in the field of technology.

On the margins of its rapid economic growth, China has financed annual double-digit increases in its defense budget for nearly two decades. With the proceeds, it is steadily modernizing its military capabilities. The People’s Liberation Army intercepted a missile in mid-air in January, and plans are in the works to build aircraft carriers.

These are impressive achievements. They deserve our respect. Beijing has raised 400 million people out of poverty. And it has recovered a respected place on the international scene without up-ending existing international institutions.

Some analysts assume that China is destined to become a rival, which could eventually replace America as the world’s pre-eminent superpower. With all the talk about China’s “rise,” it is little wonder that the Chinese people are brimming with self-confidence, or, for that matter, that Chinese officials display with increasing frequency those qualities of cockiness and petulance which people around the world have long accused Americans of monopolizing.

How then should the United States think of China? Some portray Beijing as a looming military threat; some regard it as our most promising global partner; while some expect it to compete fiercely with us for global economic leadership.

China as a Threat

The case for regarding China as a potential military threat reflects underlying premises about the strategic conduct of emerging great powers. As Robert Kagan once put it, “Might not China, like all rising powers of the past, including the United States, want to reshape the international system to suit its own purposes? …”

The presumption is that China’s immense population and rapid growth will inevitably whet its appetite for power, for glory, for prestige, and for dominion. According to Robert Kaplan, “The American military contest with China in the Pacific will define the 21st century.” But no one can be certain how China will eventually utilize the great power it is rapidly accumulating. Though China is augmenting its power, it remains a relatively poor country. Its annual military expenditures are still roughly an eighth the size of America’s. It’s also important to note that China will have its hands more than full at home. An additional 200 to 400 million Chinese will likely be moving from the countryside to urban centers and this will present challenges to China’s leaders which will demand their single-minded attention. The predicate for that concentrated focus is peace and stability on its borders. Nor should one forget that China’s neighbors are no geopolitical patsies. China at present needs peace, it needs friends, and it needs time to cope with its internal challenges, and to consolidate the sinews of its industrial and military potential.

China as a Partner

At the opposite end of the spectrum, there are those who regard China as the United States’ most logical and promising global partner. We now have a regular High Level Strategic and Economic Dialogue. Some proponents have gone so far as to suggest institutionalizing the partnership in a G-2. Despite increasingly intensive consultations with China, I see no G-2 on the horizon.

As promising as China’s prospects may be, it is still mainly preoccupied with its domestic problems, and has no evident strategy for placing its growing power in the service of larger international purposes. Global events such as the Copenhagen climate conference and the Doha Multilateral Trade negotiations suggest that China still prefers a relatively low international profile, which allows it to focus on problems close to home.

It is not clear that America wishes to share superpower status with China or any other state, and a mismatch between our systems and values persists.

None of this diminishes the importance of close policy coordination with China. And it is heartening that on several matters – such as imposing economic sanctions on Iran, and allowing for the gradual appreciation of China’s currency – Beijing appears recently to have adopted a somewhat more expansive notion of its international responsibilities. Still, any attempt to turn bilateral consultations into a G-2 would create an illusion of global governance on which neither of us could deliver, and upon which other countries would frown.

China as a Competitor

The nub of our relationship with China in the period immediately ahead will be economic competition. And China is destined to be a formidable competitor. Many pundits assume that it is only a matter of time before Beijing prevails, and some are busy pin-pointing the precise date on which China’s GDP will exceed our own.

The competition with China involves our respective firms and it involves our political and economic systems; it pits the world’s most powerful proponent of open markets and free trade against the largest and most impressive practitioner of state capitalism.

China’s state capitalists – whether they run public enterprises or privately owned firms – answer to politicians rather than share-holders. They learned in the recent global downturn that there are risks associated with depending so heavily on the changeable spending habits of American consumers. They are determined to rely more heavily in the future on their own internal market, and to use it to breed “national champion” firms that can compete in global markets in high technology sectors. The state is not reticent about using its power to shape the terms of competition between “home team” companies and foreign competitors, and has already utilized a variety of subtle and not-so-subtle protectionist devices – from outright subsidies to lax enforcement of intellectual property rights – to do so.

These features of state capitalism notwithstanding, it will be challenging for China to sustain current levels of growth. Two are particularly worthy of comment. China is in the demographic “sweet spot” at present with a huge pool of workers, relatively few children, and a manageable number of retirees. Flash forward 15 years or so, and the labor pool will begin visibly to shrink, and the number of retirees dramatically to expand. This will have a powerful effect on its growth.

Second, China’s economic system has performed impressively; its political system confronts a growing number of chronic ills – major league corruption, increasing disparities in income, persistent pressures from estranged minorities, and growing demands for participation in politics.

These are not necessarily insurmountable problems. China’s leaders have consistently demonstrated impressive skills in managing internal challenges in a pragmatic way. But social and political issues will demand more and more of the leadership’s attention, impose wider claims on China’s resources, and, over time, slow the current pace of GDP growth.

China’s ‘Rise’ as a Wake-Up Call

Still, we need to view China’s “rise” as a wake-up call for America. It is tackling its problems purposefully with a long-term view. Many in Asia see the growth of China’s power in juxtaposition to a gradual decline in American influence. This can affect the inclination of many emerging countries to tilt toward state capitalism or reposition themselves in a fluid balance of power.

When I was a student, the Soviet Union launched Sputnik. This came as a gigantic shock to most Americans, but it also spurred our country to put its house in order. Congress passed legislation that improved our educational system, expanded our infrastructure, and increased our basic research in fields like aerospace, computer science, and telecommunications, which underpinned America’s economic prosperity – indeed its global preeminence – throughout the rest of the 20th century.

We need to respond to China’s impressive growth in a similar fashion. We need to do those things that bolster our competitiveness over the long haul. For far too long we have been putting up with sub-standard schools. We are piling up levels of debt that are unsustainable. We are wavering on immigration, one of the most fundamental sources of our creativity. And we tolerate incredible political dysfunction in Washington and some of our state capitols.

Americans are a competitive people. We should welcome China’s competitive challenge. The problems China’s “rise” presents, and the challenges it poses, are tough. But they are not unfamiliar, and they are not insurmountable. We have some time to get our house in order. The question is whether we can muster the unity of purpose, the sense of urgency, and the political will to do so.

If we do, our relations with China will prove readily manageable. If we do not, China won’t be the most important reason to worry about our future.

Michael H. Armacost is the former U.S. ambassador to Japan and the Philippines and former under secretary of state for political affairs. He is currently a Shorenstein Distinguished Fellow at the Asia/Pacific Research Center of Stanford University and chair of The Asia Foundation’s Board of Trustees.

Related locations: China
Related programs: Regional and International Relations

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