Confronting the China Challenge

Chinese President Hu Jintao’s visit to Washington will give President Bush the necessary opportunity to put the U.S. relationship with China on a more stable path to protect vital American security and economic interests.

The United States has had friction with China before, particularly after the Tiananmen assault in 1989 and the Taiwan Strait tensions in 1995 and 1996. China now is accumulating power more rapidly, posing new security and economic challenges and fostering fears in the United States and the Asia-Pacific region.

Mr. Bush will need to articulate to Mr. Hu and to the American public how he sees the China challenge more squarely than he has before and to refute American misunderstandings about China. The challenge China presents stems from its spectacular economic growth in the 14 years since Deng Xiaoping opened markets and permitted foreign investment.

China has transformed from a poor, backward society to a major player in world markets – its growth of gross domestic product has rocketed near 10 percent annually, and it’s attracting more foreign direct investment than any country in the world.

It is the hub of an unprecedented integrated East Asian economy, sucking in capital, commodities and unassembled products from the region and exporting finished products to the United States and Europe; China’s trade surplus with the United States last year was $200 billion.

Its accession to the World Trade Organization in 2001 capped China’s integration into the global economy. The world labor market now has an additional 400 million workers bringing a “supply shock” to global markets, and as an importer of basic commodities – above all, crude oil – China significantly affects prices: for manufactured products downward, for commodities upward.

Americans are questioning whether U.S. economic and security interests can be protected in the face of China’s spectacular growth.

On the economic side, there is fear that U.S. manufacturing jobs are being lost, and will be lost in greater numbers, to a ruthless Chinese manufacturing sector that benefits from cheap labor, massive inward investment, an undervalued currency and disdain for intellectual property rights.

On the security side, China’s decade-long double-digit increases in spending on defense have fed an impressive military modernization program. This has generated fears in the United States and Asia of the emergence of a Sino-centric Asia circling a politically unreformed Communist state, leading to a reduced U.S. presence and influence.

Mr. Bush, therefore, needs to embrace a policy first articulated in September by Deputy Secretary of State Robert B. Zoellick, who called for China to be a “responsible stakeholder” in the international system. Mr. Bush must ensure that his Pentagon does not act in ways that convince China that we regard it as an enemy, which would only create a self-fulfilling prophecy.

The president must make the case to the GOP-controlled Congress that anti-China protectionist measures will be self-defeating because they ignore the complex and interdependent character of the bilateral economic relationship.

For the American public, Mr. Bush needs to explain that China is not the Soviet Union. Except for its stance on Taiwan, China is not pressing other territorial claims. It is overwhelmingly focused on the massive internal challenges involved in lifting what is still a poor country into modern standards of living. It is not pursuing external adventures, or seeking external conflict.

As for the economic challenge, the message is mixed but, on balance, positive for the United States. China is by far our fastest-growing large export market, a ready buyer of U.S. Treasury instruments that hold down our interest rates and a source of cheap products that hold down our cost of living.

Mr. Bush should reassure the Chinese that the United States does not seek to “contain” China, as it did the Soviets, or to block China’s access to sources of energy; a prosperous China is in U.S. interests. But he must make clear that for our part, we look to China to play a constructive role internationally, and he must explain that China needs to take more seriously the threat of a nuclear-armed North Korea and Iran.

He should tell Mr. Hu that the United States will not tolerate further bending or breaking of pledges on Taiwan’s status by Taiwanese President Chen Shui-bian, but also make clear that Washington will not countenance Chinese military force or pressure against Taiwan.

Further, the president must tell Mr. Hu that the implicit bargain between our import of Chinese labor-intensive goods and Chinese acceptance of our capital-intensive goods depends on respect for intellectual property rights and on a more balanced trade between our countries, which will require more rapid movement on adjustment of Chinese currency’s value.

Finally, Mr. Bush should tell Mr. Hu how our support for democracy around the world affects our China policy. Beijing’s current backward movement on freedom of expression is damaging respect for China internationally.

Mr. Bush might want to stress freedom of religion to reinforce promising signs of a shift in Beijing’s position on the Roman Catholic Church’s rights in China and on the possibility that the Dalai Lama could return to China. He also should make clear to Mr. Hu that draconian Chinese restrictions on the Internet will not work and will hurt Chinese development.

Asia needs the United States for economic and security reasons, and the United States needs Asia. That is what the Asians want to hear, and it is what Mr. Bush should say publicly.