The United States and China: A G-2 in the Making?

This article originally appeared in Japanese in the July 2011 issue of Gaiko.

Zbigniew Brzezinski of the Center for Strategic and International Studies and Fred Bergsten of the Peterson Institute for International Economics each attracted a lot of attention for their proposals that the United States and China form what they called a G-2. The essence of these proposals was that, as the two largest economies, as members of the UN Security Council, and as the most prominent rising power and the strongest “status-quo” power, these two nations should work together to address the big challenges facing the international system. They and only they could provide the global public goods that the world required.

It is fair to say, however, that people outside the United States paid far more attention to Brzezinski’s and Bergsten’s G-2 idea than did Americans themselves. The proposal sank like a stone in Washington but caused great ferment overseas, particularly among countries that would be unhappy if Beijing and Washington acted upon the idea.

Now there are a couple of “germs of reality” in the Brzezinski-Bergsten G-2 idea. In the sixth month of his presidency, President Barack Obama laid out a grand vision for bilateral relations between the two countries. On the occasion of the first Strategic and Economic Dialogue, he said, “The relationship between the U.S. and China will shape the 21st century, which makes it as important as any bilateral relationship in the world…. If we advance [our mutual] interests through cooperation, our people will benefit and the world will be better off—because our ability to partner with each other is a prerequisite for progress on many of the most pressing global challenges.” President Obama and President Hu Jintao have repeatedly stated their “commitment to building a positive, cooperative, and comprehensive U.S.-China relationship for the 21st century, which serves the interests of the American and Chinese peoples and of the global community.”

Moreover, there are some “pressing global challenges” that stem from the policies of the two countries. Global macroeconomic imbalances are the result, primarily of the bilateral economic imbalance between the United States and China and the related domestic policies. China saves too much and the United States consumes too much. That asymmetry leads to a large bilateral trade imbalance and the necessity for China to recycle its export earnings, usually by purchasing American debt. This bilateral imbalance affects the stability of the global economy, and the only way to reduce this instability is for China to consume more and the United States to save more. The problem of climate change is similar. China and the United States are the two largest emitters of greenhouse gases. Unless they are willing to tackle the problem, global warming will continue to endanger the planet.

But these phenomena do not translate into a G-2. Note the nuances in the statements cited above. When Obama referred to the U.S.-China relationship, he said it was “as important as any bilateral relationship.” The implication is that other relationship could be just as important (the U.S.-Japan alliance, perhaps?). The president had the option of calling it “the most important,” but he chose not to do so. Moreover, the Hu-Obama commitment (only a commitment) was to “build” a cooperative relationship. They did not assert that such relationship existed. And there is the hint that this effort would take time (“for the 21st century”). So even declaratory policy is guarded.

Moreover, although this emphasis on cooperation between Beijing and Washington cannot be dismissed as sheer rhetoric, I would argue that it is not the same as advocating a condominium between them, which is the connotation of a G-2. Moreover, the record of cooperation so far does not inspire huge confidence that it will broaden and deepen. G-2 is more illusion than reality.

The Strategic Context: What is China’s Trajectory?

Actually, from a theoretical point of view it should be rather surprising that anyone is talking about a G-2. Given the dynamic of a China that is rapidly accumulating power and a United States in difficulties, wide-ranging cooperation would be the last thing anyone would expect. A situation of rapid power transition would say that rivalry is far more likely, and that the rising power will challenge the status quo and the position of the state or states that guard the established order. A rising power has a temptation to expand, and as they do so, they impinge on the interests of established powers. In that context, cooperation and condominium is impossible, unless the established power decides to accept the dominance of the rising power.

Now there is no question that China’s power is growing; we see all of the signs. No one can be certain what China’s long-term goals are. Will it work within the existing system or challenge it? China’s leaders may not know themselves. For much of the last three decades, China has been very cautious in its behavior: working in international institutions, accepting global norms in a number of areas, and reassuring other powers that its rise will be peaceful. (Actually, we should talk about China’s revival as a great power rather than its rise, but that is a terminological point.)

And there are some reasons to believe that this moderate approach may continue:
 

• China has a host of internal problems (corruption, poverty, wealth and income inequality, a weak social safety net, and environmental degradation), and China’s leaders spend most of their time worrying about how to cope with them.

• This is the era of globalization, and not the era of geopolitics. Countries accumulate economic power not by seizing territory but by enhancing interdependence. And that can create mutual vulnerabilities.

• This is also the era of nuclear weapons, which has placed limits on great-power rivalry.

• Concerning China’s growing conventional military power, it is still no match for that of the United States. China is only just beginning to accumulate the ability to project military power beyond its borders, something the United States did very well in World War II.

• China’s leaders are ambivalent about the growth of domestic nationalism. They use it to legitimize the rule of the Communist Party and respond to it up to a point, but they fear unrestrained nationalism might be turned against the regime.

• Since the early 1970s, U.S. and Japanese administrations have based policy on the idea that we can shape the direction of Chinese strategy away from a narrow pursuit of power and in the direction of global responsibility. So far, we have succeeded.

By and large, moreover, China has taken a very conservative approach to risk (Taiwan is a bit of an exception). Beijing has not started fights unless it knew it would win. Its leaders have had healthy respect for the power of the United States. It has accommodated U.S. power where necessary even as it builds up its internal strength. It has expanded its external influence only where it could. So far, China’s approach has been beneficial to peace and stability.

Logically, however, the uncertainty that is at the core of a power transition should lead analysts and policy makers to reserve judgment on what will happen in the long term. Just because China has on balance accommodated to the international system “so far” does not mean that it will do so forever. Just because a rising power that pursues limited goals and is averse to risk while it is accumulating power does not mean that it won’t adopt more ambitious objectives and take on more risk once it is stronger. What China is doing now makes perfect sense for a rising power in a relatively weak position. This may be the most dangerous point to challenge the existing international order. So other countries should not be lulled into a sense of complacency regarding Beijing’s long-term goals. We can hope that the present is a forerunner of the future, but we should not assume that it will be. If we assumed the best and China altered course, by then it might be too late to do anything in response.

Experience as well as logic demonstrates the need for some caution. Over the past two years, China has sometimes acted in ways that suggest that it is abandoning restraint and pursuing its own interests in ways that do not take account of the interests of its neighbors.

• In the summer and fall of 2009, Beijing began a campaign, voiced mainly by scholars and formal officials, to convince the Ma Ying-jeou administration on Taiwan that the time had come for political talks. It did so at a time when President Ma faced serious domestic problems, and did not wish to make them worse by engaging in political talks with China for which a consensus did not exist within Taiwan.

• In early 2010, China responded sharply (perhaps overreacted) to President Obama’s decision to notify Congress concerning an arms package for Taiwan and to meet with His Holiness the Dalai Lama.

• China’s maritime agencies stepped up an effort to expand the country’s presence in the East and South China Seas. This reflected a more fundamental policy objective to push out its strategic perimeter away from the coast. The most telling example of this effort was the Senkaku Islands incident of September 2010, which quickly escalated into a serious diplomatic incident. But it was also manifested in growing tensions in the South China Sea between China and other countries that have claims in the Spratly Islands. This came to a head at the ASEAN Regional Forum meeting in Hanoi, but the tensions have only gotten worse in 2011.

• China sat idly by while North Korea took provocative action against South Korea: first the sinking of the Cheonan naval vessel in March 2010 and then the shelling of Yeonpyeong Island in November. That China in effect took Pyongyang’s side was deeply resented by both the government and public in South Korea (more on the Korea issue below).

There is some debate as to whether all of these actions reflected strategic decisions by central leaders to more vigorously assert China’s interests against its neighbors. In some cases, particularly maritime disputes, it may be that the agencies concerned were not under firm central control. In some cases, Chinese leaders were probably constrained by strong nationalist sentiment. But still the damage was done.

The United States became involved in each of these issues, primarily because it was the ally or partner of the countries affected by China’s actions. Thus, Washington reaffirmed its position that the Senkaku Islands fell within the scope of the U.S.-Japan security treaty. These episodes exacerbated questions that the Obama administration had about China’s commitment to regional stability. And it was common in China during 2010 for analysts and commentators to regard these various episodes not as signs of problems in their country’s external policy but as a U.S. plot to contain China and stop its rise. So it was no surprise that the problem of “strategic mistrust” has received so much attention in the bilateral relationship, including in the two joint statement concluded by Presidents Obama and Hu at their summits in November 2009 and January 2011. This mistrust and the interactions that create it belies the existence of a G-2.

The Strategic Context: How Should the United States Respond?

In a situation of power transitions, an established power must make choices on how to respond to a rising power. It must start with an accurate assessment of the rising power’s goals. If the established power assumes that the rising power’s objectives are benign when they are hostile, or if it assumes the rising power’s goals are hostile when they are benign, it will make serious mistakes (e.g. Neville Chamberlain and Hitler). Then the established power has different options for their response. These run from a preemptive strike and hard containment on the one hand to engagement (encouraging constructive behavior through positive incentives) and appeasement on the other. Balancing (building up one’s own power and strengthening one’s alliances) is an intermediate option. And of course an established power can adopt a mixed strategy.

One type of mixed strategy is called “hedging,” placing a two-sided bet. The established power will hope for the best by pursuing engagement, in the hope that the rising power will accommodate to the international system. At the same time, it will prepare for the worst, by building up its strength in order to deter the rising power from a challenge. A hedging strategy is most appropriate when there is uncertainty about the rising power’s long-term goals. It is particularly appropriate when the rising power adopts limited goals and a cautious approach to risk in the near term but is not transparent about its long-term objectives. Because the United States and Japan are uncertain on just that point, they are hedging against China’s rise. Each may have a different combination of engagement and building strength, but they are still hedging. Actually, China is hedging too, because it worries about U.S. and Japanese intentions.

Indeed, each side is strengthening itself to manage downside risk. China is building up its military power: steadily, systematically, and impressively. The Bush administration, for example, began a major upgrade of American facilities on Guam and an unstated reason for doing so is to be ready for a more powerful China. The Pentagon is developing new military platforms and modernizing existing ones with China in mind. Japan seeks to expand its air and naval capabilities. The U.S.-Japan alliance is being strengthened.

There are two dangers in this situation. The first is that each side will give in to its suspicions rather than maximize its opportunities. Second, the interaction of defense planning efforts will create a result that is inconsistent with the more positive intentions of political leaders. Those planning efforts must adopt a rather long perspective, given the time it takes to develop and deploy sophisticated weapons systems. Right now, the United States must try to assess China’s capabilities and intentions in the late 2020s and act on those estimates. China must do the same.

Cooperation and G-2 in the Context of Power Transition

Given the dynamics of the current power transition, the idea that China and the United States might work together begins to make sense. It is one element of engagement, whereby the United States gives China a seat at the table of world leadership but expects it to join it in defending and promoting the interests of the international system (this is what the Bush administration meant by the idea of “responsible stakeholder”). By fostering habits of cooperation, the two countries can reduce their doubts about the long-term intentions of the other even as they address the world’s problems. Cooperation does not eliminate fear or negate the hedging strategy, but it may shift the balance away from building strength and towards engagement.

But even if cooperation is a good way to manage the rise of China, that does not necessarily dictate a G-2, or condominium, for very simple reasons. First, China is probably not ready to take up the full responsibilities of global leadership. Although its resources are growing they are still not unlimited. Serious domestic problems remain. And Beijing seems wary of trying too much externally, only to fail and lose face. So within the guiding principle of “韬光养晦有所作为” (remain humble and cautious, refrain from taking the lead, but still have some accomplishments), the element of restraint is still primary and the element of activism secondary.

Second, one cannot rule out the possibility that Chinese policy makers question whether cooperation with the United States will really promote China’s interests (even as they endorse the idea rhetorically). Chinese are quite comfortable with the idea that competition among major powers is the dominant feature of the international system. Hence, they might regard America’s “cooperation agenda” as a tactic to tie China down and contain its rise. The idea that competitors might cooperate to their mutual benefit is rather novel.

The United States itself sees a serious down-side to a condominium with China. Of course a G-2 would assume that our interests are quite similar, but that premise is open to doubt. More important, Washington believes that other major powers can be good partners for cooperation for defending the international system. China and the United States are not the only countries that have the capacity to contribute global leadership. Japan and the European Union are certainly in that group, and they have also demonstrated a sense of responsibility to do so. Russia might earn a seat at the table. So for the United States to pursue a G-2 with China would deprive it of the valuable contributions that other major powers can provide, and it excludes them from the table of global leadership.

What the United States has sought, therefore, is not a G-2 with China but a “G-Several” with other major powers, including China . And there are already cases of this cooperation in action. The six-party talks concerning the denuclearization of North Korea are one case, bringing together the United States, China, Japan, South Korea, Russia, and North Korea. On Iran’s nuclear program, the Permanent Five-plus-One (the U.S., Great Britain, France, Germany, Russia, and China) have collaborated. For the global economy, because economic power is more dispersed than military power, there is a larger set of actors: the G-20. But the principle is the same: global problems are most appropriately addressed by the countries that have the largest stake in the issue concerned and have the greatest capacity to do something about it. Global leadership is not a club with fixed membership, but a shared commitment to the common good. Creating issue-specific collectives facilitates the formulation of sensible solutions. A “G-Several” approach does increase the problems of coordination and decision-making but it also increases the number of actors who own the outcome.

This is not really a new idea. It was a concert of power that preserved the peace in Europe for several decades after the Napoleonic Wars. Franklin Roosevelt had a similar vision for ensuring international peace and security in the post-World War II period. What Roosevelt called the “Grand Design” envisaged a significant leadership role for the United States, the Soviet Union, Great Britain, and China (a concept that had concrete expression in the permanent members of the UN Security Council). This vision resurfaced after the end of the Cold War with the “new world order” idea of George H.W. Bush and was revived by his son and Barack Obama.

Question Marks

Whether such an ambitious approach can be realized is another question. It does require the major powers to subordinate narrow national interests and a zero-sum mentality and take on a special responsibility for the preservation of the international system. A concert of power is easy to propose but hard to bring about and execute, since the participants must minimize mutual suspicion and maximize joint cooperation. In East Asia, there is a specific problem. Japan and South Korea are jealous of their alliance relationship with the United States and worry about China’s growing power, while conversely, China might worry that America and its two Asian allies will gang up against it. So cooperation among the four powers is not easy.

Indeed, the difficulties inherent in multilateral cooperation have been on display regarding North Korea, because China’s approach to the problem has differed from that of the United States, Japan, and South Korea. The problem starts with not-trivial, conflicting definitions of the problem. A consensus has emerged in Washington, Tokyo, and Seoul that:

• North Korea is unlikely to give up its nuclear weapons, no matter what incentives other parties provide. It has no interest in entering into serious negotiations.

• North Korea sees a strategic value in periodically engaging in provocative behavior, if only to place the United States and others on the defensive. It really isn’t that afraid of offensive U.S. military action.

• Therefore, North Korea is, and is likely to remain, the most serious threat to peace and stability in Northeast Asia.

It appears that China starts with a different assessment. That is, China appears to have concluded that the preservation of a stable North Korean state and Korean Workers Party regime is more important than any instability that North Korea might provoke in the Northeast Asian region or whatever danger it might create through the proliferation of nuclear material, equipment, or technology. A stable North Korean state is important not only for stability in Northeast China but also for China’s strategic position.

Different assessments lead to divergent sets of priorities. China emphasizes the preservation of the North Korean state, even to the point of tolerating North Korea’s two acts of war against South Korea in 2010 (the sinking of the Cheonan and the shelling of Yeonpyeong Island). The United States, Japan, and South Korea place higher emphasis on the denuclearization of the DPRK and on deterring conventional provocations by Pyongyang against the ROK.

In fact, the events of 2010 created a rather serious situation on the Korean Peninsula, one that could draw the United States and China into a conflict. After the Yeonpyeong shelling, the ROK government came to the conclusion that its security and domestic political security required a more robust response to future conventional provocations. Previously, the South had been willing to absorb blows from the North, but this passivity only invited more attacks. So it is likely that the ROK will meet the next provocation from the North with violent retaliation in order to increase deterrence. That raises the real possibility that North Korea will respond to the retaliation and the conflict will escalate. Seoul will look to Washington for help from its ally and Pyongyang will look to Beijing. The risk of wider conflict, even war, may be relatively small, but it is not zero. And the consequences of an unrestrained and widening vicious circle are profound.

A hint of these dangers came after the Yeonpyeong shelling, when the United States joined South Korea in exercises in the Yellow Sea, including the carrier USS George Washington. The Chinese government, the PLA, and the Chinese public became alarmed for the PRC’s own security. This led President Obama to emphasize during his January summit with Hu Jintao the commitment of the United States to protect the safety of its South Korean ally. Obama acknowledged that this level of allied resolve might make China feel more vulnerable. But the way to reduce it, he said, was for Beijing to pressure North Korea to refrain from further provocations. The absence of any hostile actions by Pyongyang since November 2010 suggests that China has in fact done more to restrain the North, but that is cold comfort. Pyongyang’s restraint may be purely temporary. And the interaction between Washington and Beijing during 2010 over North Korea have deepened bilateral mistrust and heightened suspicions about long term intentions. That is far from the forward-looking cooperation that is implied by the idea of a G-2.

Conclusion

We could describe and elaborate other issues on which the interaction between the United States and China has been problematic and fostered growing mutual mistrust. Tensions in the East and South China Seas have been noted. The arena of cyberspace is becoming a growing source of disagreement between Beijing and Washington, in part because it is difficult, if not impossible, to identify the source of an attack, and because cyber warriors can independently cause damage, uncontrolled by their governments. Space is another matter, since U.S. communications and other satellites both give it a military advantage over less technologically sophisticated adversaries and are increasingly vulnerable to elimination by Chinese missiles. Chinese economic policies, like indigenous innovation, cause concern about the environment for investment by foreign companies. All of these issues raise even more questions of the prospects for Beijing’s active participation in a cooperative structure, whether it is G-2 or “G-Several”.

But that is not a reason to give up. China does have overlapping interests with the United States, Japan, and the European Union on many of these issues (or at least some actors in China see overlapping interests). The major challenges facing the international system cannot be addressed by the United States alone (and they cannot be successfully managed without U.S. and Chinese involvement). And whether cooperation with Beijing, as one element of the engagement half of a hedging strategy, is successful will help determine what kind of great power China will become.