To: John Kerry, U.S. Secretary of State
From: Cody Knipfer, Student – McDaniel College
Date: 10/21/14
RE: The Rise of China and its Implications for U.S. Foreign Policy

Secretary Kerry,

The People’s Republic of China (PRC) is rapidly rising to become the dominant regional actor in the Asia-Pacific, and as such its relationship with the United States will come to define the international environment of the 21st century. As such, it is vitally important that the United States pursue a strategy that seeks closer, cooperative relations with the PRC. This policy memo outlines background information about the PRC, its foreign policy intentions, its perceptions of the United States, and provides policy suggestions for the coming relationship between our two countries.

Background Context

Geography[i]

Situated between North Korea, Russia, India, and Vietnam and stretching into Central Asia, the People’s Republic of China comprises the bulk of land territory in the East Asian landmass. A number of relevant geographic statistics about the PRC include:

  • A territory encompassing 9,560,960 square kilometers, the 4th largest in the world and the largest in East Asia.
  • 14 borders with other states, the most in the world along with Russia.
  • Access to the East China Sea, Korea Bay, Yellow Sea, and South China Sea.
  • Extremely diverse climate, with biomes ranging from tropical rainforests, subarctic, mountains, and deserts to temperate grasslands, forests, and deltas.

Population and Demographics[ii]

A number of population and demographic statistics about the PRC demonstrate its enormous size and reveal future internal challenges:

  • A population of over 1,355 million people, the most in the world.
  • Population growth rate of .44% annually, the 159th highest in the world.
  • 91% Han Chinese, with a vast diversity of smaller minority groups found largely along the peripheral borders.

By comparison, the United States, as the world’s 3rd most populous country, has 318 million inhabitants – less than 25% that of the PRC.[iii] However, as a result of the PRC’s massive current population and slow growth rate, a result of Beijing’s attempts at controlling population rates, the PRC is one of the world’s most rapidly aging countries. This could present significant economic issues for Beijing in the coming decades, as millions leaving the workforce may not be replaced with new workers.[iv]

Economics[v]

The People’s Republic of China is today a major global economic power. Since the late 1970s, the PRC has transformed from a closed, centrally-planned economic system to a more market-oriented one.[vi] Economic liberalization reforms included the phasing out of collectivized agriculture, the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, the growth of the private sector, the development of a modern banking system and stock market, and an opening to foreign investment and trade. A number of statistics demonstrate the PRC’s rapidly growing economic power and clout:

  • GDP of $9.33 trillion, as of 2013, the 2nd largest in the world.
  • Annual growth rate of 7.7%, the 13th highest in the world as of 2013.
  • 1st largest global exporter.
  • $3.821 trillion in reserves of foreign exchange and gold, the most in the world.
  • $1.95 trillion in imports.

The PRC’s primary export partner is the United States of America, which purchases 16.7% of Chinese exports. Japan, which purchases 6.8% of Chinese exports, is the PRC’s second largest export partner, followed by South Korea at 4.1%. The PRC’s largest import partner is South Korea, from which it purchases 9.4% of its imports, followed by Japan at 8.3% and Australia at 7.8%.

However, the Chinese government faces numerous economic challenges which it must deal with for sustained economic growth.[vii] These include:

  • Reducing a high domestic savings rate and correspondingly low domestic consumption.
  • Facilitating higher-wage job opportunities.
  • Reducing corruption and economic theft.
  • Containing environmental damage and social strife produced by a rapid economic transformation.

Government[viii]

The People’s Republic of China is a single-party, socialist, authoritarian state, in which the Chinese Communist Party has supreme political authority. This authority is realized through a comprehensive control of the state, military, and media.[ix] Power in China is concentrated in the “Paramount Leader,” current Xi Jinping, who holds the three most important political and state offices: “General Secretary of the Communist Party,” of the “Central Committee,” and “Chairman of the Central Military Commission.”[x]

The primary branches of China’s governmental system include:[xi]

  • Legislative Branch: the National People’s Congress
  • Executive Branch: State Council
  • Judicial Branch: Supreme People’s Court
  • Military Branch: People’s Liberation Army

Military Capabilities

Over the last decade, the People’s Republic of China has embarked in a program of significant military expansion and modernization. The PRC has a capable ground force, the largest in the world, backed by an even larger reserve/militia component. Its navy is developing deep-water capability, its air-force is capable of regional power projection and is rapidly modernizing, and the PRC is focusing on developing a sophisticated offensive and defensive missile capability.[xii]

Under most conceivable circumstances, the PRC’s military would be capable of sustaining the country well against outside attack and would render an indefinite occupation of Chinese territory impossible.[xiii] However, as major military operations outside of peace-time training and maneuvers have yet to be carried out, the true force and logistical capabilities of the PRC’s military remains to be seen or tested. The strengths of the PRC’s military and as of yet unproven contemporary capabilities should be kept in mind in Washington when developing strategies for areas of potential conflict with the PRC. Ultimately, considering the massive size and growing modernity of the PRC’s military, it would likely be most beneficial if the United States avoided a military confrontation at all costs.[xiv]

Chinese Foreign Policy Intentions

Chinese Foreign Policy Objectives

As the People’s Republic of China continues to rise on the world stage, it is pursuant of a number of foreign policy objectives in the Asia-Pacific region. Beijing’s overarching, long-term strategic goals appear to be maintaining regional stability and displacing the United States as the dominant regional hegemon.[xv] Maintaining a peaceful, stable international order in the Asia-Pacific is a primary goal for Chinese policymakers. The Communist Party maintains internal order and legitimacy through its ability to produce economic results; considering the deeply interconnected nature of regional economies, any major disruption of the peace and stability in Asia would have dire consequences for Beijing.[xvi]

Displacing the United States as regional hegemon can be considered China’s long-term strategy. Beijing seems to believe that American hegemony in the region necessitates Chinese subservience.[xvii] While the PRC is not yet in a position economically or militarily to displace the United States through force, its current strategy is to restrain the United States’ exploitation of its own political, military, and economic strength. To achieve this end, Beijing has pursued two courses of action:[xviii]

  • Active diplomacy with regional and extra-regional states aimed at expanding China’s regional political and economic influence, which is seen as the most effective way to counter the United States while avoiding direct confrontation.
  • The modernization of its armed forces, so to exert a more tangible hard-power influence and balance against American power projection.

 

Threats to China’s Regional Interests

The PRC’s strategic dilemma and arguably greatest threat lies in the difficulty of forming a dominant regional role without antagonizing the United States or alienating other regional powers. As the PRC exerts an increasingly hegemonic role in the Asia-Pacific, many neighboring states seek to balance against it by forming security arraignments with the United States. Doing so, they minimize the capacity for Beijing to directly influence the region, which the PRC increasingly wishes to do.[xix]

Other threats to Beijing’s interests of regional peace and stability include transnational, internal, and regional issues such as:

  • Piracy
  • Crime and Smuggling
  • Internal popular dissent, particularly in China’s peripheral regions such as in Xinjiang with minority populations.[xx]

Chinese Allies and Enemies

The Chinese-North Korean relationship is perhaps the most significant of the PRC’s various alliances. The PRC is North Korea’s most important ally, biggest trading power, and main source of food, arms, and energy Beijing has historically opposed harsh international sanctions on North Korea, as it hopes to avoid regime collapse and refugee influx across the border. The close nature of this relationship gives Chinese policymakers significant clout over North Korea, providing it the potential to “resolve” the North Korean issue and thereby increase The People’s Republic’s international standing. Yet Pyongyang’s continual “saber-rattling,” refusal to defer to Chinese wishes, and international isolation appears to be wearing Chinese patience thin. As the PRC develops closer trading relationships with North Korean enemies such as South Korea and Japan, and as the dynamics of the region shift towards greater Chinese hegemony, the Chinese-North Korean relationship is bound to become more complicated.[xxi]

Other Chinese alliances of significance, which entail diplomatic, military, and economic ties, include those with:[xxii]

  • Russia
  • Myanmar
  • Pakistan
  • Venezuela
  • Zimbabwe
  • Iran

Meanwhile, Beijing perceives the United States and its regional allies to be pursuant of a strategy of containment against the PRC’s rise. While nonetheless sharing deep economic ties and other forms of interdependence with these states, they can for the purposes of this policy memo be considered the PRC’s principle “enemies.” These states include:[xxiii]

  • The United States of America
  • Japan
  • Australia
  • South Korea

Chinese Perception of the United States

At present, it would appear as though Beijing acknowledges that it cannot fully dislodge the United States from the Asia-Pacific. Still, the PRC is highly sensitive to and suspicious of America’s power projection, which it views as an attempt to contain the PRC’s economic and political rise. Still, deep economic interdependence between the United States and the PRC deters direct conflict between the two states. Chinese policymakers acknowledge that the need to have the United States as a principle economic partner and the desire to avoid a military confrontation with the United States will encourage coming US-Chinese cooperation.[xxiv]

Nonetheless, Beijing sees the United States’ continued presence and hegemony in the Asia-Pacific as preventing its own rise to dominance. The United States’ projection of power into the region has served to amplify Chinese suspicions and fears. Among China’s main concerns about American involvement in the region are:[xxv]

  • The strengthening of U.S. military alliances
  • The revision of U.S.—Japan defense guidelines
  • The planned deployment of ballistic missile defenses
  • The supply of advanced American arms to Taiwan

The Context of US-Chinese Relations

Potential Threats to American Regional Interests

A rising China poses a number of possible challenges to the United States’ interests in the region and regional goals. As the PRC increasingly asserts its hegemony, it appears as though Beijing seeks to displace the United States as the dominant regional actor. Beijing’s rhetorical disclaiming of interference in the internal sovereignty of other states and pursuit of peaceful dialogue is at odds with its recent belligerent strategic maneuvering, suggesting to Washington that China could disrupt the order the United States has created in the region over the last half-century. China’s potential threats to American regional interests include:[xxvi]

  • Displacing the United States as the dominant regional leader and hegemon.
  • Establishing a hostile international order through Chinese-dominated IGOs.
  • Exacerbating territorial and sovereignty disputes with American allies, particularly Japan.
  • Continuing economic policies at odds with American economic standards.
  • The continued cyber-theft of trade, military, and government secrets from the United States and regional allies.

Potentials for US-China Cooperation

Despite the perceived threat of a rising China, and despite Beijing’s seeming desire to replace the United States’ as regional hegemon, the PRC has much to offer the United States in the way of achieving Washington’s regional goals. A peaceful, stable, cooperative Asia-Pacific is as beneficial, if not more beneficial, for the PRC’s interests as it is for the United States’. Potential areas for cooperation with the PRC that would benefit American interests and regional goals include:[xxvii]

  • Tackling transnational issues such as piracy, smuggling, crime, terrorism, and climate change.
  • Addressing regional issues such as nuclear proliferation and a belligerent North Korea.
  • Continuing regional economic growth and development through bilateral and multilateral economic agreements and arraignments.
  • Strengthening regional institutions and developing peaceful norms of cooperation through multilateral dialogue and engagement.

China’s Influence on America’s Agenda toward Other Regional Actors

Increasingly, states in the Asia-Pacific seek to maximize their range of strategic options by avoiding commitments that could lead them into conflict. They do not feel a need to seek alignment with either the PRC or the United States in order to protect their own interests. Deeply interconnected with the PRC yet threatened by its growing hegemony, states are forming diverse bilateral and multilateral relationships in order to increase their security and support strategic interests. This strategy of “hedging” has positively influenced regional states willingness to engage with the United States, but has also limited the United States’ capacity to pursue a strategy of direct “containment” against the PRC. Still, Beijing’s growing military capability has increasingly motivated neighbors to draw more closely to the United States, allowing Washington to deepen regional security arraignments and broaden military alliances.[xxviii]

Policy Suggestions and Recommendations

As the two states with regional and global primacy, the PRC and the United States have a vital stake in each other’s success. As such, the United States should make a concentrated effort to prevent a ‘Cold War’ environment in the 21st century Asia-Pacific, which would be counter to both states’ interests of regional security and prosperity. Washington must ensure that the U.S.-Chinese relationship is defined not by mutual suspicion and strategic rivalry, but by fair competition, practical cooperation on regional issues, and the constructive management of differences and disagreements. Beijing’s expanded regional role should be seen as complementary to the United States’ sustained strategic engagement in the Asia-Pacific, and offers Washington the possibility of a major partner cooperating on issues of mutual benefit.

Cooperation with the PRC can be found in numerous areas where interests overlap. As such, the United States should prioritize high-level dialogue with Beijing aimed at finding points of mutual interest and agreement, and focus heightened energy on working constructively with China to resolve them. Dialogue can come in the form of new, ad-hoc meetings and conferences, through established international institutions such as the United Nations, or through existing frameworks such as the high-level “US-China Strategic and Economic Dialogue.”

The PRC’s economic development should be seen as healthy for the region’s continued growth and prosperity, and as such the United States should pursue policies and agreements aimed at strengthening economic ties with, and the economic environment around, China. These include:

  • Pushing Beijing toward a market-determined exchange rate.
  • Negotiating bilateral investment treaties.
  • Increasing access to Chinese markets for U.S. business.
  • Developing more transparent regulatory regimes.

The United States should also attempt to find diplomatic, dialogue-driven solutions to issues such as forced technology transfer and the theft of intellectual property and trade secrets. Of course, though a deeper and more “fair” economic relationship would benefit both partners, the United States has had past difficulty shaping China’s economic strategies to meet its interests. Dialogue and compromise alone may not convince Beijing to conform to the United States’ economic standards. At present, as a method to incentivize a more responsible Chinese approach to economic issues, the United States should consider bringing the PRC into the Trans-Pacific Partnership, a major, comprehensive free-trade agreement which includes many states in the Asia-Pacific. Doing so would not only further integrate the Chinese-U.S. economies, providing a deterrent to conflict, but would be a signal to the Chinese that the United States wishes to include it constructively and prominently in the regional economic order.

As the PRC develops and modernizes its armed forces, it is crucial that Washington builds a sustained and substantive military-to-military relationship with Beijing. Identifying concrete areas of cooperation is crucial to reducing the risk of military confrontation, while engaging the Chinese military in high-level dialogues and on-the-ground cooperation dispels mutual suspicion and builds shared capacity. Finding and engaging in military partnerships with the PRC aimed at resolving regional issues such as piracy, climate change, and natural disasters further has the potential to develop lasting regional norms of cooperation and peaceful projection of force among major powers. It is through direct engagement, as opposed to counterbalancing or military buildup, that Washington and Beijing can peacefully cooperate despite their strategic disagreements and major armed forces.

Though the United States does not take sides on the sovereignty questions underlying territorial disputes between the PRC and other regional powers, Washington should have an interest in the way these states manage and resolve these claims. The United States should thus push the PRC, along with other territorial claimants, to resolve these issues with fair dialogue and compromise. While maintaining a position of neutrality, the United States should attempt to have these territorial disputes moved into arenas of international dialogue such as the United Nations, and in turn provide diplomatic assistance through mediation or other means when needed. Washington should also make clear that it believes these issues should be decided on the basis of the merits of the PRC’s and other claimants’ legal claims and adherence to international law and norms, rather than the strength of their militaries or the size of their economies. Territorial disputes and issues of sovereignty have the potential to plunge the region into conflict; as such, the United States should continue taking steps to monitor these disputes, engage with the governments involved, and attempt to provide a moderating influence towards all parties should tensions heighten.

Increased dialogue and attempts at cooperation with China fit into the United States’ broader, already-established regional “rebalancing” strategy.[xxix] Prioritizing the Asia-Pacific as the region most crucial to the 21st century, this strategy involves:

  • Modernizing and strengthening U.S. regional alliances
  • Developing economic and bilateral ties with emerging partners
  • Supporting effective regional institutions
  • Increasing trade and investment to expand broad economic growth,
  • Ensuring a continued regional military presence that supports the full range and scope of the United States’ activities overseas.

The rebalancing can further be seen, and should be branded, as a signal to regional powers that the period of the United States’ singular focus on the Middle East, terrorism, and nation-building is over. To dispel Chinese suspicions of the United States’ motives for increased focus on the region, American policymakers have tried to portray the rebalancing as focusing on the region at large[xxx].

While China’s rise can easily be seen as a causal factor in the rebalancing, it is far from the only one, and Washington should make clear this fact. Piracy, international smuggling, illegal drug trades, nuclear proliferation, climate change, and natural disasters are only a few of the many issues in the Asia-Pacific which extend beyond the nature of the U.S.-China relationship. A rhetorical or strategic framing of America’s current and future regional involvement as a means to counter China’s rise risks not only drawing Chinese ire, but limits the possibilities for broad American engagement. Thus, the United States’ rebalancing and future engagement in the Asia-Pacific should be portrayed to regional states, and perceived in Washington, as a means to ensure a lasting stability and order which benefits all, including China.

END MEMO

Works Cited

[i] Statistics taken from: “China,” CIA World Factbook, https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html (accessed October 23, 2014).

[ii] Ibid.

[iii] “United States of America,” CIA World Factbook, https://www.cia.gov/library/publications/the-world-factbook/geos/US.html

[iv] “The Security Risks of China’s Abnormal Demographics,” The Washington Post, http://www.washingtonpost.com/blogs/monkey-cage/wp/2014/04/30/the-security-risks-of-chinas-abnormal-demographics/ (accessed October 23, 2014).

[v] “China,” CIA World Factbook.

[vi] Mitter, 2007.

[vii] “China,” CIA World Factbook.

[viii] “China,” CIA World Factbook.

[ix] Ralph H. Folsom, John H. Minan, Lee Ann Otto, Law and Politics in the People’s Republic of China, 76–77. St. Paul : West Publishing, 1992

[x] Andrew Higgins, “Hu’s Visit Spotlights China’s Two Faces,” The Washington Post, http://www.washingtonpost.com/wp-dyn/content/article/2011/01/15/AR2011011504013.html (accessed October 23, 2014).

[xi] “China,” CIA World Factbook.

[xii] Dreyer, 2007.

[xiii] Dreyer, 2007.

[xiv] “Pentagon: China Continues Military Modernization,” Defense News, http://www.defensenews.com/article/20140605/DEFREG02/306050042/Pentagon-China-Continues-Military-Modernization (accessed October 23, 2014).

[xv] Dreyer, 2007.

[xvi] Yan Xeutong, “China. Striving for Preventive Cooperation,” Regional Perspectives on the U.S. Rebalance. Asia-Pacific Defense Forum, January 1, 2014

[xvii] Mitter, 2007

[xviii] Mitter 2007.

[xix] Roy, Denny. “More Security for Rising China, Less for Others?” AsiaPacific Analysis, no. 106, January 2013.

[xx] Armin Rosen, “China May Have Commited A Tiananmen Square-Scale Massacre This Year – And Totally Covered It Up,” Business Insider, http://www.businessinsider.com/chinas-other-major-protests-2014-10 (accessed October 24, 2014).

[xxi] Beina Xu and Jayshree Bajorina, “The China-North Korea Relationship,” Council on Foreign Relations, http://www.cfr.org/china/china-north-korea-relationship/p11097 (accessed October 23, 2014).

[xxii] “China,” CIA World Factbook.

[xxiii] Ibid.

[xxiv] Mitter 2007.

[xxv] Ibid.

[xxvi] Ibid., Dreyer 2007.

[xxvii] Xeutong, Yan. “China. Striving for Preventive Cooperation.”

[xxviii] Cossa, Ralph A. “Security Dynamics in Asia.” In International Relations of Asia, edited by David Shambaugh and Michael Yahuda, 368. Lanham:Rowman & Littlefield, 2014.

[xxix] Forum Staff. “Regional Perspectives on the U.S. Rebalance.Asia-Pacific Defense Forum, January 1, 2014.

[xxx] Ibid.