China, My China

In the past two issues of The National Interest, there has been a great deal of discussion about "China's rise" in the international system. Let me give a Chinese point of view on China's evolving role in global affairs.

In his address at the United Nations Summit on September 15, 2005, President Hu Jintao declared that China would "actively participate in international affairs and fulfill its international obligations, and work with other countries in building . . . a new international political and economic order that is fair and rational." Indeed, over the last several years, China has been shouldering more and more international responsibilities. From joining the World Trade Organization (WTO) to playing a leading role in the Shanghai Cooperation Organization in Central Asia and the six-party talks in northeast Asia, China promotes a multilateral approach to solving regional and even global problems and accepts the importance of promoting a "rules-based" international system.

China's rapid growth and growing presence are inevitably reshaping Asia; as a permanent member of the UN Security Council, China bears responsibility for the maintenance of global peace and stability. But how far does China's willingness to be a greater player in global affairs run, and what is China's capacity to contribute to global governance?

Since the beginning of the post-Cold War era, China's foreign policy has been guided by the maxim of "keeping a low profile" and only taking action "if conditions permit" China to do so with little risk. Moreover, the traditional notions of sovereignty and non-interference in the domestic affairs of states--points President Hu reiterated in his remarks at the UN--are still dominant in shaping China's approach to international affairs. Most Chinese still view international affairs through the lens of what benefits the national interest, rather than believing that China has any special responsibility for the global order. More recently, some have been concerned that if China assumes a more prominent role in both regional and international organizations, this could stoke up the "China threat", especially in the United States, fanning fears that Beijing is embarking on a campaign to expand its sphere of influence.

China, therefore, is not fully prepared to embrace the notion that it is a custodian of the current international system, with all of the responsibilities that would entail. Significantly, its foreign policy still is largely focused on dealing with regional problems on a bilateral level with its neighbors. To argue that China is on the verge of becoming the "second superpower" of the international system is premature.

Moreover, this raises a second question: Does China have the capacity to play a greater role in international affairs, both in terms of diplomatic and economic power? For the past three decades, China has been portrayed as a globalization success story, with impressive rates of economic growth. China's high-technology industries, its nascent "homegrown" multinational corporations and its space program testify to China's emergence as a force in the global economy.

Nonetheless, China as a whole, while currently the world's fourth-largest economy, still remains a "low income" or "less developed" country. The issue of mass poverty is still a pressing challenge. We must not overestimate China's economic capacity. In recent years, the gap between China's economic development and social progress has widened; economic growth has occurred at the expense of social cohesion (notably between the developed eastern industrial coast and the less developed regions of the West), and growth has also extracted a huge environmental cost.

Therefore, China's top priority at present and for the foreseeable future is to solve domestic problems. Its capacity in dealing with pressing global issues is relatively limited--although China's booming economy allows it, over time, to become a more important contributor in supporting multilateral solutions to problems ranging from terrorism and the proliferation of weapons of mass destruction to climate change.

But more is needed. As an emerging great power, China must be willing and able to take on a larger and more responsible role in global affairs--but this should not occur haphazardly. Chinese universities and think tanks need to do much more in discussing the role China should be playing in the world. Regrettably, China has failed to be an "intellectual actor" in addressing questions of global governance. When President Hu speaks of China desiring to facilitate a "harmonious world", this must be translated from the realm of "good wishes" into formulating policy recommendations, identifying the challenges requiring China to assume a greater role of leadership, and developing the norms, rules and institutions that will define the international order of the 21st century.

China's "peaceful rise" or "peaceful development" has enormous implications for the international system--and in turn, China needs to be prepared to shoulder the responsibilities for global peace and stability befitting a power of its stature.

Pang Zhongying
Director, Institute of Global Studies, Nankai University
Tianjin, China

Contributing Editor,
The National Interest

In "A New Forum For Peace" (Winter 2005/06), Ian Bremmer, Choi Sung-hong and Yoriko Kawaguchi describe an idea that is gaining support among Asian and American government officials, academics and think tankers: establishing a forum based on the six-party talks to address energy security in northeast Asia.

Toward the end of their recipe for peace, however, the authors make chop suey out of the proposed forum, saying it could also "coordinate mutually beneficial steps toward predictable and sustainable economic policies that address currency issues, conflicts over intellectual property rights, lender-of-last-resort activities, regulatory standardization and possibly trade liberalization"--for good measure.

Adding extra functions to the forum's mission would weaken the effectiveness of their proposed forum--a problem APEC is facing. Trade liberalization and regulatory harmonization should be addressed in separate forums for other reasons, too. Countries should have similar levels of development, governance and transparency to aim at regulatory convergence and deep liberalization. The United States, therefore, should consider negotiating a comprehensive economic partnership agreement with like-minded countries in East Asia.

Candidates for such an agreement would include key U.S. ally Japan, Australia, with which the United States has signed an free-trade agreement (FTA), and Korea, with which the United States has launched FTA talks. Deep economic integration will signal to regional challengers and domestic polities that U.S. interests are contiguous with these countries. Moreover, initiating integration would allow the United States and its friends to have a larger influence on the terms of the final shape of a future Asian regionalism. The United States and other democratic countries also could collectively bring pressure to bear over intellectual property rights on countries such as China at the WTO.

An economic partnership agreement could take initial shape in four areas. The first would be border measures: Rich countries should lower tariffs and aim to reform their subsidized, protected agricultural sectors in the long term. Although regional agriculture reform has been problematic elsewhere, pressure from regional partners can only help add leverage, particularly as long as Asian countries seem to free ride behind EU problems with agricultural reform. The second would be the convergence of regulatory systems, such as professional standards, to facilitate business transactions.

Third, signatories of such an agreement could collaborate on intellectual-property-rights enforcement and environmental technology to set positive precedents for the international system. Fourth, participants would reduce border and visa security regulations for businesses in exchange for tighter security cooperation in areas such as container security and business visas. Greater opening at the border would depend on shared freedoms, the rule of law and transparency.

Meanwhile, an energy security forum comprising northeast Asia's top producers and consumers could help manage tensions between East Asia's giants by fostering cooperation in the area that is most likely to create conflict: competition for natural resources. Such a forum is urgently needed. For it to be effective and realistic, however, it must focus on its core mission, leaving economic liberalization and harmonization to other forums, bilateral agreements or the WTO.

Sherman Katz
Carnegie Endowment for
International Peace
Washington, DC

Devin Stewart
Center for Strategic and
International Studies
Washington, DC

The rise of China and the emergence of a global supply chain centered in Asia have been themes extensively covered in the last several issues of The National Interest, notably in the contributions in the Winter 2005/06 issue from Maurice R. Greenberg ("On Leadership") and Barry Lynn ("War, Trade and Utopia"), as well as the proposal for a Northeast Asian Regional Forum ("A New Forum for Peace"). Allow me to make some additional observations.

China's economic growth continues to be impressive, but not all omens are good ones. Moreover, the Chinese leadership knows that it is imperative to create jobs to ensure social stability as the foundation for political stability. Until now, China and the rest of Asia have depended upon increasing exports to the United States. The question remains whether, in the event of a major recession in the United States, the economies of China and the other states of Asia would be able to generate sufficient domestic demand to replace any slowdown in U.S. consumption.

There are encouraging signs. The number of urban households in China with an annual income above $5,000 has been increasing by about 24 percent per year. In less than ten years, China is expected to emerge as the second-largest global consumer after the United States. India is also enjoying rapid growth in domestic consumer demand. What this means is that we are reaching a point where Asia is becoming a self-sustaining growth area, no longer dependent on exports to the United States as the primary factor for determining economic growth. Indeed, for Asia as a whole, the share of total exports going to China has increased from eight percent (in 2000) to approximately 18 percent in 2005. An intra-Asia supply chain is emerging with the economies of Asia becoming interlinked, with China at the center.

This is creating not only economic but political incentives for greater Asian integration. Among the member states of ASEAN, there is clear recognition that they need to organize themselves into becoming a strong partner and counterweight to China. In turn, China itself is recognizing that it needs to "share" some of the benefits of its economic growth with its neighbors; that the prerequisite for political stability and economic prosperity for the entire region is Chinese magnanimity, realizing that its growth has to benefit Asia as a whole and not only China. This is why China has initiated negotiations for a free trade agreement with, the ten ASEAN countries at first and then India.

There are two odd partners in this scheme: Japan and Australia. Japan has seen its political and economic leadership in Asia slipping away in favor of a new economic order driven by China and India. However, Japanese industry cannot survive with a sullen Japan as partner. It needs to maintain its place inside this ongoing process of integration to avoid relegation in the supply chain. This explains why the chairman of the Japanese Business Federation paid a visit to Hu Jintao, bypassing his own prime minister in the process.

Australia faces the dilemma of coming to grips with the awkward question whether it belongs to Asia or not. Analyzing the trade statistics reveals strong Australian dependence on northeast Asia, less so on Southeast Asia--and an Australia left outside an integrated Asia would spell doom for many of Australia's primary industries.

The wooden nickel in all this is the U.S. attitude. The United States has not--apparently--made up its mind whether it wants to bless Asian integration or throw a spanner into the works. Politically, of course, a stronger Asia could also act as a counterbalance to the United States. Economically, it makes sense for the United States to further Asian integration as a way to maintain momentum for global growth. Measured in purchasing power parities, China and India account for 80 percent of the U.S. gross national product. Add in Japan, Korea and Southeast Asia, and you get approximately 125 percent. This allows the United States to "share" responsibility for keeping the global economy on track with the rising economies of Asia. The alternative in the form of global recession is, frankly speaking, not attractive.

Jorgen Orstrom Moller
Visiting Senior Research
Fellow, Institute of Southeast Asian Studies
Singapore

Adjunct Professor,
Copenhagen Business School
Copenhagen, Denmark