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How China and the U.S. Will Manage Competition for Influence

This article was written in response to Wang Jisi’s “The ‘Two Orders’ and the Future of China-U.S. Relations.”

Wang Jisi is surely right that “the main factor determining the future of Sino-American relations will be internal political and economic developments, not the struggle for supremacy in the Asia-Pacific region.” Both governments have other important challenges to meet.

First, Washington refuses to accept that though the United States is not in decline, its international influence is not what it was. It is unlikely to regain the leverage it once wielded, because China and so many others now have more than enough economic muscle and political self-confidence to resist U.S. plans and demands, even if they can’t directly challenge U.S. pre-eminence. Until U.S. officials develop a strategy that accepts and adapts to this reality, Washington will continue the costly foreign policy improvisations of recent years—and its deepest wounds will be self-inflicted.

For its part, China faces a domestic economic reform process of unprecedented complexity, one that demands a massive transfer of wealth from the state-run sector into Chinese households in order to shift growth toward a more sustainable consumption-driven model. That’s why Beijing’s greatest challenge comes not from U.S. political pressure and military might but from wealthy, well-connected Chinese who will lose from this process—and from an angry Chinese public if things go wrong.

Two Way Street

07.09.15

The ‘Two Orders’ and the Future of China-U.S. Relations

Wang Jisi from Two Way Street
The China-U.S. relationship may be the most complex relationship that has ever existed between two major powers. Ties between China and the United States are deepening, and at every level the interaction between the two countries is marked by both...

But Wang’s concern that Washington will try to “destabilize China’s internal political order” reflects not a practical approach but a bout of paranoia. No rational person believes the U.S. government has the means to destabilize China, and let’s hope no one is foolish enough to consider it a good idea even if it were possible. China is well on its way to becoming the world’s largest economy, and the “mutually assured economic destruction” at the heart of today’s U.S.-Chinese relationship ensures that no such massive-scale ideological sabotage makes the slightest sense.

U.S. officials will continue to promote American values. They will talk up democracy and criticize abuses of human rights. But the Chinese leadership surely understands that failure to deliver a better life for the Chinese people, not pressure from Washington, is the most likely source of unrest inside China.

Wang also argues that in China, the Party and press accuse Washington of “supporting independence for Taiwan, Xinjiang, and Tibet, and upsetting the stability of Hong Kong.” It’s hard to see how anyone in China’s government can fail to notice U.S. warnings to Taiwanese leaders against provocative actions toward the mainland or imagine how Washington might move beyond rhetoric to “liberate” Tibet and Xinjiang. After tepid U.S. support for protests in Hong Kong, why would Beijing worry about a U.S.-sponsored “color revolution” there?

It’s not as though Washington is as focused on China as it should be. The architects of U.S. foreign policy will continue to debate how best to contain ISIS, manage changing relations with Iran, back Vladimir Putin out of Ukraine, discretely help steer Greece and its creditors toward a sustainable deal, and build momentum behind a newly invigorated U.S. trade agenda. All but the last of those is probably beyond increasingly limited U.S. means.

Wang also argues that if the U.S. will respect Communist Party dominance of China, that Beijing will respect the U.S.’s “leadership position in the world.” First, China has no ability to project significant military power outside East Asia, and it won’t for many years to come. In that sense, it poses no threat to U.S. dominance.

But why should Beijing accept U.S. economic pre-eminence? Aware that it cannot challenge U.S. military supremacy for the foreseeable future, Beijing will continue with its strategy of creating space for further development by advancing its investment agenda in ways that undermine Western-dominated international lending institutions. This is a shrewd approach.

China’s “One Belt, One Road” policy has committed Beijing to invest billions in infrastructure along the historic trade routes that connect Asia to Europe, boosting financial and trade ties with more than 40 countries. More broadly, China now invests in every region in the world to secure the long-term supply of commodities needed to keep its economy growing and to open new markets for its goods and excess production in heavy industry. In the process, it wins new friends willing to align with Chinese rules and standards.

This strategy extends to finance. China aims to make the renminbi a global reserve currency. This will expand Beijing’s influence over global commodity prices, lower its borrowing costs, and further increase international demand for the yuan. To that end, Beijing is developing the CIPS alternative payment system, which is designed to make cross-border yuan exchanges quicker and easier for global investors.

A Partnership with China to Avoid World War

George Soros from New York Review of Books
International cooperation is in decline both in the political and financial spheres. The U.N. has failed to address any of the major conflicts since the end of the cold war; the 2009 Copenhagen Climate Change Conference left a sour aftertaste; the...

Further, Beijing’s decision to launch the Asian Infrastructure Investment Bank offers a direct challenge to U.S.-led lending institutions like the World Bank and IMF. The willingness of dozens of countries, including key U.S. allies, to sign on as members enhances Beijing’s bid to build credibility as an international lender of first resort. This strategy, not posturing in the South China Sea or a quixotic U.S. bid to destabilize China from within, marks the central point of U.S.-Chinese competition.

The key question, for both governments, is how to respond to heightened competition, including in cyberspace. Beijing has demonstrated an ability to hack sensitive U.S, targets and a willingness to use it. We can assume that Washington has capabilities and plans of its own. Communication between leaders—and the U.S. and Chinese militaries—is much more mature and extensive than it used to be. That matters. And there are plenty of areas where the two countries’ interests align. Both need a stable international system in which to invest. Each needs the other’s economy to grow.

The ultimate question is how Washington and Beijing will manage the growing competition for influence. Will the U.S. look for opportunities from China’s rise, or attempt to contain it? If the latter, will China become more aggressive? Who will win the internal policy debates within the two governments?

In coming years, these will the most important questions—for America, China, and the entire international order.