The China Awaiting President Obama

As President Obama prepares for his first personal and presidential visit to the People’s Republic of China, expectations are high concerning the U.S.-China relationship.

What kind of China will President Obama encounter? What mood will he find the Chinese leadership in? What is China’s government wrestling with at present? How will these considerations impact the Sino-American relationship?

The kind of partner that Beijing can be for Washington is always very much conditioned by the state of China’s myriad domestic concerns. This is the prism through which Chinese leaders view the world, and their ability to pursue and respond to external partnerships is very much conditioned by internal pressures. The following are some personal impressions gained over the past three months of living in Beijing.

The Present Political Balance

While some analysts outside of China see factional divisions and coalitions in the current leadership (notably Brookings Institution Senior Fellow Cheng Li), inside of China the leadership appears remarkably cohesive. Occasionally one hears marginal complaints about one or another person or policy, but on the whole the Chinese Communist Party (CCP) leadership enjoys widespread credibility and legitimacy. Not only do they appear generally united, but they also are incredibly active. The sheer pace of leadership politics and activities is impressive. So is the substance of politics, as the party and government come forth with a steady stream of policy initiatives. They are definitely not on the political defensive.

At present, the CCP and its leadership are approximately half-way through the five-year transition from the 17th to 18th Chinese Communist Party (CCP) Congresses and Central Committees, and hence the transition to a new leadership. In 2012, at the 18th Congress, many current leaders—importantly including Premier Wen Jiabao and President/CCP General Secretary/Central Military Commission Chairman Hu Jintao—will retire in favor of the so-called “fifth generation” leadership.

Thus, in the Chinese political calendar, the early stages of leadership transition have begun. The heirs apparent seem clearly identified and signals of continuity are being sent at home and abroad. The activism of Vice-Premier Li Keqiang, who is slated to become Premier, has been particularly noteworthy. Vice President Xi Jinping, widely believed to be Hu Jintao’s successor, has also been increasingly active at home and abroad. He played a significant role in the CCP’s Fourth Plenary Session of the 17th Central Committee in September and took a highly-publicized trip to Europe in October. The fact that Xi was not appointed vice-chairman of the Central Military Commission at the Fourth Plenum surprised some, but actually it would have been very unusual for this to have occurred at this early juncture. Li Yuanchao, currently head of the powerful CCP Organization Department, just concluded a successful visit to the United States and has been the point-man overseeing internal political reform. Bo Xilai, party secretary of Chongqing and another key “fifth generation” leader, has also been very visible (some feel too visible), initiating an unprecedented crackdown and trial of local gangsters and officials. The activism of these leaders-in-waiting is an important signal to the party and population (as well as the outside world) of continuity. But, as Cheng Li’s research shows, this new generation of leaders are likely to be even more assertive and many hold more reformist visions than the current incumbents.

Beyond the leadership, the CCP is also moving ahead with internal political reform of the party apparatus. The Fourth Plenary Session, noted above, added important impetus to advancing and deepening political reform. Experimental direct elections of party committee members in Jiangsu and Sichuan were praised, and the Plenum’s concluding “Decision” approved a nationwide program to promote “intraparty democracy,” increase transparency of decision making, strengthen fiscal accountability of party committees and members, and crack down on corruption. While the Plenum acknowledged “unprecedented challenges,” the CCP has clearly decided to advance political reform (albeit within a one-party dominant system). President Obama may wish to probe this subject in his discussions with Chinese leaders.

President Obama will also encounter a People’s Republic of China that has recently celebrated its sixtieth anniversary with a massive military parade and celebration in Tiananmen Square on October 1st. This event spiked patriotic sentiment, and President Obama should understand that he is dealing with a both a confident leadership and an increasingly nationalistic nation. The rebounding economy (see below) adds further fuel to China’s growing confidence.

If there is an underbelly to this confidence it pertains to the ethnic problems in Tibet and Xinjiang, which makes the leadership very nervous. Unprecedented riots in the Xinjiang capital of Urumqi this summer and last year in Lhasa, Tibet have resulted in judicial trials, imprisonments, executions, and strong security clampdowns in each “autonomous region.” Despite all the official rhetoric concerning ethnic harmony flowing from the government in recent months—and there has been a deluge of it—the reality is that ethnic tensions remain sharper than ever. Externally, China’s campaign to demonize the exiled Tibetan and Uighur communities, particularly the personas of the Dalai Lama and Rebiya Kadeer, has only aggravated China’s relations with several countries.

Economic Optimism & Uncertainty

Fueling China’s general confidence has been the strong rebound in the domestic economy since the second quarter of 2009. The government’s unprecedented RMB 4 trillion ($585 billion) stimulus package has produced a boom in several production sectors. GDP growth is on pace to achieve 8.9 percent this year, the financial section is flush with credit and liquidity, the housing and stock markets have rebounded strongly, infrastructure projects are underway everywhere, demand for raw materials is up, inventories are declining, industrial production is recovering, re-employment is increasing, retail sales are up, and purchasing power is expanding.

The economy is back on track, and is likely to be the international engine to pull other major economies out of recession. This subject of global economic recovery will be high on President Obama’s list of priorities to discuss with China’s leaders.

However, many Chinese economists are worried that that the economy recovery is proceeding too quickly, is potentially inflationary, and there are widespread concerns about “rebalancing” the economy. There is also concern that a new injection of stimulus funding will be needed when the current round is spent. Most importantly, stimulation of domestic consumer spending is still quite inadequate—thus many economists fear China is missing a golden opportunity to reorient its growth model away from export-oriented growth to domestic consumption-stimulated growth, as the premier and government have repeatedly emphasized. Such a rebalancing is several years overdue, but the government’s stimulus package has been primarily aimed at revitalizing the export sector and hard infrastructure projects, in attempts to re-employ workers and maintain social stability. Local economists argue that the stimulus money should be targeted more directly at stimulating consumption and capital markets, while allowing the renminbi currency to appreciate more rapidly so as to lower overall exports. This would ease China’s massive trade surpluses to some extent (the surplus with the United States through August, $143.7 billion, was actually down 15 percent over 2008).

America’s and China’s contribution to global economy recovery is likely to be high on the agenda as Presidents Obama and Hu meet. They will carry forward progress made earlier in the year at the G-20 summits in London and Pittsburgh, and more recently in a bilateral context at the Joint Committee on Commerce & Trade meeting in Hangzhou.

Seeking a Global Partnership: Is China Ready?

One of the main thrusts of President Obama’s agenda in Beijing will be to continue to try to build a truly global partnership with China to address a daunting array of international and regional issues. As China has become a global actor in the past few years—active on continents, in countries, and with issues that are totally new for Beijing—the possibilities for Sino-American cooperation have grown. The Bush administration recognized this in Robert Zoellick’s famous call for China to become a “responsible stakeholder” in the international system. The Obama administration has continued this conceptual paradigm (but not the terminology) and has been nudging Beijing to play a great role in the international arena and to do so in concert with the United States. However, this is not an effort to create a “G-2” condominium, as some have suggested. It is simply a recognition that many global and regional problems cannot be effectively addressed unless the United States and China are both engaged, preferably in concert with each other.

The list of pressing global and regional issues is lengthy. They include: global financial recovery and stability; reforming the international institutional architecture; climate change and clean energy; global energy and natural resource supplies; Afghanistan-Pakistan; Iranian and North Korean nuclear programs; the balance of power in Asia and the western Pacific; nuclear arms control; and a range of non-traditional security issues (public health, counter-terrorism, non-proliferation, piracy, human trafficking, etc.). Even Africa and Latin America are beginning to figure on the Sino-American agenda. In addition, the bilateral agenda includes a range of trade, currency, human rights, and military issues. Then there is the “hardy perennial” issue of Taiwan. It is a crowded and complex global, regional, and bilateral agenda.

While Beijing clearly seeks a strong and stable relationship with Washington, the question is whether China is really ready to be the kind of global partner that the U.S. seeks. Over the past two years there has been an animated internal debate in the Chinese government and international relations circles as to whether China should be a “responsible big power” (fuzeren de daguo) and play a greater global role or not. China is terribly conflicted internally over this issue. Many argue that China has little to gain from greater global involvement—especially in partnership with the United States (which would tarnish its reputation with developing countries). They argue that China should continue to practice Deng Xiaoping’s diplomatic axiom “Taoguang yanghui, yousuo zuowei” (bide time, hide capabilities, but do some things). This is a blueprint for minimal and selective international engagement, and it remains the majority opinion in the Chinese debate.

While China is internally conflicted about its international identity and desired global role, it also lacks many of the instruments and the power to inject itself into world affairs more fully. It also has different interests from the U.S. in the developing world. While Washington is correct to ask China to “do more” internationally, it is likely to be disappointed with Beijing’s willingness and ability to do so.

Another issue of considerable debate and concern in the Chinese capital today is the question of “strategic reassurance” (zhanlue huxin)—a concept originating in a speech by Deputy Secretary of State James Steinberg at the Center for a New American Security in Washington on September 24th. As Deputy Secretary Steinberg phrased it, strategic reassurance is a “bargain” in which the U.S. and its allies welcome China as a “prosperous and successful power” while China reassures the world that its “development and glowing global role will not come at the expense of security and well-being of others.” This issue is raised in virtually every meeting and discussion I have had in Beijing about U.S.-China relations over the last month. Chinese interlocutors are not only perplexed about the content of the concept, but wonder if it is to become the new leitmotif of the Obama administration’s policy towards China. They also note that Steinberg’s speech was long on U.S. demands of China to provide such strategic reassurance, but was completely silent on what the United States can do to reassure China on its core strategic concerns.

It is true that both countries still lack strategic trust in each other, despite their many commonalities and the complex list of issues they mutually confront. This is particularly true in the military realm. Hopefully, General Xu Caihou’s recent visit to the United States, and the seven-point agreement reached in his discussions with Secretary of Defense Robert Gates, will provide new impetus to the mil-mil relationship. This will begin to build the desired strategic reassurance.

Into the Middle Kingdom

This is some of the background and environment that awaits President Obama as he prepares for his first visit to China. The Chinese government is prepared to warmly receive the president, and there will be many hours of official discussions. It would be most useful, however, if these conversations were truly strategic and broad in nature—rather than a recitation of talking-points issue-by-issue. If the two presidents can truly discuss their mutual responsibilities in a rapidly changing and dangerous world, this will hopefully forge the kind of tangible cooperation and international partnership desired. For the Chinese, cooperation derives from trust—whereas Americans tend to build trust through cooperation. Such an interactive process can go far toward building the kind of strategic reassurance that is so importantly needed in Sino-American relations. 

David Shambaugh is a nonresident Senior Fellow in the Foreign Policy Studies Program and the Center for Northeast Asian Policy Studies at the Brookings Institution, a Professor and Director of the China Policy Program in the Elliott School of International Affairs at George Washington University, and is currently on sabbatical as a Senior Visiting Fulbright Scholar at the China Academy of Social Sciences Institute of World Economics and Politics in Beijing for the 2009-2010 academic year.