Success breeds confidence, and rapid success spawns arrogance. That, in a nutshell, is the China problem facing Asia and the West. But no country faces a bigger dilemma on China than the US because the present US policy simply isn’t advancing its core objectives.
Rising power is emboldening Beijing to pursue a more muscular foreign policy, as exemplified by several developments—from China’s inclusion of the South China Sea in its “core” national interests, an action that makes its claims to the disputed islands non-negotiable, to its vile protests against the Indian Prime Minister visiting a state of the Indian Union, Arunachal Pradesh, on which Beijing has resurrected its long-dormant claim. A new chill in relations between the US and Chinese militaries has been underlined by a Chinese admiral’s carping lecture on American “hegemony”.
Having earlier preached the gospel of its “peaceful rise”, China is now beginning to take the gloves off, convinced that it has acquired the necessary muscle.
That approach has become more marked since the advent of the global financial crisis in autumn 2008. China has interpreted that crisis as symbolizing both the decline of the Anglo-American brand of capitalism and the weakening of US economic power. That, in turn, has strengthened its twofold belief—that its brand of state-steered capitalism offers a credible alternative, and that its global ascendance is unstoppable.
Chinese analysts have gleefully pointed that even as the US’ fiscal and trade deficits remain alarming, state-driven capitalism has given China economic stability and rapid growth, allowing it to ride out the international financial crisis. Today, China’s exports and retail sales are soaring and its foreign-exchange hoard is now approaching $2.5 trillion.
The biggest loser from the global financial crisis, in Beijing’s view, is Uncle Sam. That the US remains dependent on Beijing to buy billions of dollars worth of treasury bonds every week to finance a yawning budget deficit is a sign of shifting global financial power balance—an advantage China is sure to politically milk in the years ahead.
The current spotlight may be on European financial woes. But the bigger picture for Beijing is that US’ chronic deficits and indebtedness epitomize its relative decline. Add to the picture the two wars the US is waging overseas—one of which appears increasingly unwinnable— and what comes to the Chinese mind is a global superpower bogged down in serious troubles.
Against that background, China’s growing assertiveness may not surprise many. The late Chinese leader Deng Xiaoping’s advice, “hide your capabilities and bide your time”, seems no longer relevant. Today, China is not shy to showcase its military capabilities and assert itself on multiple fronts. As a result, new strains are appearing in China’s relationship with the US.
Yet the US’ economic and military travails are crimping its foreign-policy options vis-à-vis China. Washington is more reluctant than ever to exercise its leverage to make Beijing correct policies that threaten to distort trade, foster huge trade imbalances and spark greater competition for scarce raw materials.
By keeping its currency undervalued and flooding the world markets with artificially cheap goods, China runs a predatory trade policy that undercuts manufacturing in the developing world more than in the West. However, by threatening to destabilize the global economy, China threatens Western interests as well. Furthermore, its efforts to lock up supplies of key resources means it will continue to lend support to renegade regimes.
The present US policy on China is a study in contrast to the way Washington unabashedly exercised its leverage when another Asian country —Japan—emerged as a global economic powerhouse in the 1980s. Japan kept the yen undervalued and erected hidden barriers to the entry of foreign manufacturers into its market. That resulted in the US piling up pressure on Japan and periodically arm-twisting it to make trade concessions.
Today, the US cannot adopt the same approach with Beijing, largely because China is also a military and political power and Washington depends on Chinese support on a host of international issues—from North Korea and Myanmar to Iran and Pakistan. By contrast, Japan has remained just an economic power.
It is significant that China became a global military player before it became a global economic player. China’s military power base was erected by Mao Zedong, enabling Deng to single-mindedly focus on rapidly building economic power. Before Deng launched his “four modernizations”, China had acquired a global military reach by testing its first intercontinental ballistic missile, the 12,000km DF-5, and developing a thermonuclear warhead.
Over the past three decades, the 13-fold expansion of its economy generated even greater resources for China to sharpen its military claws. But for Chinese military power US policy would treat China as another Japan.
The central assumption guiding the US policy on China has gone awry—that assisting China’s economic rise would help create both a compatible and cooperative partner and political openness within. The challenge the US faces today is to reframe that policy before it becomes too late to resist China’s push for a redistributive global order whose institutions and rules respect the centrality of an authoritarian great power that is chasing unbridled ambitions.
Brahma Chellaney is a professor at the Centre for Policy Research, New Delhi and the author of Asian Juggernaut.
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