Country Report: China (April 2017)

Danielle F. S. Cohen (assisted by Dong Jiaxin)

In early 2017, Chinese experts reacted to the Trump–Xi summit and assessed the broader implications of Trump’s election for the future of the world order—which Chinese observers widely believe to be in flux—and for China’s great power relations. They also explored India’s strategic implications for China by analyzing the changing security structure in the Indian Ocean and India’s ambivalent reaction to One Belt One Road (OBOR) initiative.

Trump–Xi Summit

Chinese observers reacted positively to the Trump–Xi summit, stressing its significance for placing US-China relations on a more constructive trajectory and for building rapport between the two countries’ leaders.  In Xinjingbao, Diao Daming paints the summit as a success. His analysis reflects a common view among Chinese experts that the United States, especially given the unpredictability of Trump’s policies, has made the global world order more uncertain, while China has been acting as a stabilizing factor. China wants to work with the United States to create a new global order and strongly supports globalization.

Since Trump’s election, Diao argues, China has tried to maintain strong communication with his administration to reduce uncertainty in bilateral relations. The leadership summit offered an opportunity to increase familiarity and trust. At the same time, Diao asserts, the meeting revealed that China has taken the lead in generating proposals and developing stable bilateral relations, while the Trump administration is still fumbling for a coherent foreign policy. Xi stressed the importance of stable, cooperative US-China relations for bilateral, regional, and global affairs, and proposed upgrading the existing Strategic and Economic Dialogue into a four-part US–China Comprehensive Dialogue, encompassing dialogues on diplomacy and security, economics, law enforcement and cybersecurity, and social and cultural issues (US reports tend to portray this as a joint decision, rather than a Chinese proposal). Diao recognizes that areas of intense disagreement remain, such as how best to respond to the North Korean nuclear crisis, but concludes that China has set US-China relations on a good path.

In an interview in Liberation Daily, published on April 8, 2017, Huang Renwei similarly praises the summit’s better-than-expected results. Huang argues that the two countries successfully established amiable interpersonal relations between their leaders and developed an understanding of the other side’s bottom lines. In addition to establishing the US–China Comprehensive Dialogue, the two sides also made some progress on crisis management by creating a new mechanism for communication between the joint staffs of their respective militaries. Huang urges the two countries to create additional crisis management mechanisms to handle issues like maritime and aviation security, the South China Sea, North Korea, and economic affairs.

Overall, Huang gives the meeting “high marks” for defining the bilateral relationship more clearly, increasing the likelihood of cooperation and decreasing the probability of antagonism, and shifting from a possible trade war to a potential linkage of OBOR and US infrastructure investment projects (Xi’s invitation for US participation in OBOR was stressed in Chinese accounts, but omitted from the official White House statement on the meeting). In this light, bilateral relations have made a “U-turn” from their negative trajectory in the aftermath of the US election. Huang is optimistic that the expanded US–China Comprehensive Dialogue framework will enable better communication and deliver “results-oriented” outcomes that Trump seeks.

Huang predicts that the “100-Day Action Plan” announced by Commerce Secretary Wilbur Ross will include four aspects. First, it will attempt to decrease the US trade deficit with China by increasing US exports of oil and natural gas, relaxing restrictions on US technology exports, and liberalizing the Chinese service sector so that it is more welcoming to US companies. Second, it will seek to increase Chinese investment in the United States, which will help Trump achieve his campaign pledge to increase employment and economic growth. Third, it will include measures to increase the stability and transparency of the two countries’ currencies, which have become increasingly important given the instability of the British pound and the Euro. (Huang dismisses Trump’s labeling of China as a currency manipulator as mere campaign talk, and argues that his advisors have since learned that China has already addressed this issue.) Finally, he expects the Action Plan to address infrastructure cooperation, including a concrete plan for the United States to join the Asian Infrastructure Investment Bank (AIIB) and ways to open up US infrastructure projects to Chinese bids. Successful progress on these measures would indicate the two leaders’ commitment to pragmatic cooperation. Although Huang, like Diao, acknowledges difficult issues that remain in the bilateral relationship, including the future role of the US–Japan alliance in the Asia–Pacific, the North Korean nuclear crisis, the US deployment of THAAD in South Korea, and the disputes in the South China Sea, he expects that these issues will be addressed through the diplomatic and security dialogue framework.

In Qiushiwang, published on April 10, 2017, Lin Hongyu argues that the summit reset US-China relations toward a positive direction through talks that were deep, frank, and courteous. Lin argues that US-China relations falter with each US administration transition, but eventually recover. This recovery has been much faster than usual under Trump. Describing Trump’s many missteps (including his phone call with Tsai Ing-wen and his campaign pledge to put a 45 percent tariff on Chinese exports) as the mistakes of an “ignorant” new president, Lin argues that Trump has “learned on the job” faster than other presidents. As evidence, Lin cites Trump’s February phone call with Xi and Tillerson’s “acceptance” of the Chinese vision of a “new type of great power relations,” reciting the Chinese formulation of “non-conflict, non-confrontation, mutual respect, and win-win cooperation” during his March visit to Beijing. (Many US analysts were concerned by the Trump administration’s decision to adopt this Chinese phrase, promoted by Xi, arguing that these terms may have different meanings for Chinese and US officials, and that by adopting the Chinese rhetoric, the United States might give the impression that it is inadvertently agreeing to objectionable positions. Previously, the Obama administration had deliberately avoided using these phrases.)

Despite the summit’s success, Lin recognizes that it is just a move in the right direction, and that numerous difficulties still exist. He asserts that the US decision to launch missiles at Syria during the summit was deliberately timed, and that China must be on the “strategic defense.” Lin also argues that the summit was a success largely because of the ascendancy of a moderate wing within the Trump administration and notes that developments in great power politics or changes in domestic ideology still might negatively impact US policy toward China.

In an interview in Renminwang, published on April 8, 2017, Su Ge argues that the main accomplishment of the talks was the establishment of a friendly rapport between the two leaders that will promote the stable development of cooperative bilateral relations. This was enabled by the “manor diplomacy” of hosting the visit at Mar-a-Lago, which allowed for more honest discussions and the development of mutual trust (through small and large meetings, and the more intimate strolls that Xi and Trump took). Su believes the two countries reached a consensus in February–March that lay the groundwork for the summit, noting in particular Tillerson’s support for the “non-conflict, non-confrontation, mutual respect, and win-win cooperation” formulation laid out by Xi.

Su argues that Trump cannot “make America great again” without China’s help. The two countries must avoid sanctions and a trade war and should instead take advantage of the ample room for economic cooperation by increasing Chinese investment in US infrastructure projects and US exports to China. Generally speaking, the two countries should “seek progress while ensuring stability” in three key areas. First, Su contends that both countries benefit from the existing international system and seek to protect it. Repeating official Chinese language, he asserts that China wants to work with the United States to create a “more fair and equitable” international system. Second, Su argues that the two countries must understand and respect the core interests and strategic intentions generated by each state’s particular circumstances and not force their model on the other. The United States should abandon its zero-sum Cold War thinking and recognize that China’s win-win approach means it will not be a threat to the United States. Finally, Su argues that China and the United States must pursue consensus and seek common interests in the face of their differences. Cooperation is necessary, though not sufficient, to solve global problems.

The World Order and Sino–US Relations Under Trump

In anticipation of Trump’s inauguration, Renmin University convened a series of lectures from January 5–8, 2017, by some of China’s most prominent international relations specialists to discuss “an America and a world that are probably completely unfamiliar to you.” Yan Xuetong assessed the impact of Trump’s election for China’s rise from the perspective of moral realism. Yan argues that a state’s comprehensive power dictates its preferences: a leading state like the United States will seek to maintain its hegemony, while rising states like China will try to compete with the leading state. Because the structural distribution of power determines national interests, national interests remain constant through administration changes. However, Yan argues that the leader’s method of pursuing national interests can differ: leaders may be passive, conservative, or belligerent. In Yan’s view, Obama was conservative because he wanted to preserve the power of the already great United States. By contrast, Trump is belligerent: he believes that the United States has declined and wants to “make America great again” (a slogan Yan argues is similar to China’s “rejuvenation of the Chinese people”).

Having laid out his basic theoretical framework, Yan turns to the question of why so many people are anxious about Trump’s presidency. He attributes much of the anxiety among American liberals (who, in his view, comprise specialists and most of the global media) to the fear that Trump will change the ideology of the United States, which they believe allows it to maintain its global leadership. Meanwhile, US allies worry that the United States will no longer participate in global governance or accept its international responsibilities, and will no longer guarantee their security. Yan argues that Trump’s rejection of regional cooperation frameworks like the Trans-Pacific Partnership (TPP) means that he is unwilling to provide public goods. By contrast, China’s support of Regional Comprehensive Economic Partnership (RCEP) reflects its understanding that leading countries provide public goods because while they pay more than anyone else, they also benefit more than anyone else. Furthermore, US allies fear the United States will stop promoting liberal values. Although the leadership of a country cannot change the structure of the international system, by altering the value system, a leader can change the global norms that underlie the existing world order. In contrast, US adversaries worry that Trump will resolve disputes through the use of military force.

Yan then tries to identify Trump’s policy preferences. He argues that Trump’s top priority is to “make America great again,” which, in a zero-sum view of the world, requires China to decline, or at least not to overtake the United States. He is skeptical of the view of some in China that China will be able to buy good relations with the United States because Trump likes to make deals and China has plenty of capital. Because Trump is belligerent, Yan expects him to be prone to conflict and risk-taking in his foreign policy. Yan also believes that Trump is prone to grandiosity and wants a presidency that ranks on par with those of George Washington, Abraham Lincoln, and Franklin D. Roosevelt.

With regard to Trump’s China policy, Yan argues that Trump will seek to prevent China’s rise. Yan expects Trump to focus more narrowly on East Asia than on the broader Asia–Pacific pivot pursued by Obama. To contain China, he anticipates that Trump will depend on US alliances with South Korea and Japan, and pursue closer ties with Russia (this latter point now seems less likely, given the sharp deterioration in US–Russia relations in April). Yan also anticipates increased US-China economic competition as Trump seeks to place America first.

Yan concludes by considering the implications of Trump’s policies on Chinese foreign policy. He worries that China–Russia relations, which are based on a shared view of the United States as a strategic threat, will falter if US–Russia relations improve. He correctly anticipates that Trump will strongly pressure North Korea over its nuclear program (even, perhaps, belligerently). Yan argues that North Korea will respond by seeking stronger support from China, but may end up turning against China because China’s commitment to denuclearization means it will not give North Korea the support it wants. Finally, Yan predicts that Japan will continue its hardline policy toward China, believing that Trump will bring more opportunities for Japan–US cooperation.

In his speech, Jin Canrong reflected on China’s response to a world in chaos. Jin argues that this chaos is evident from a poor global economy (due to the lingering effects of the 2008 financial crisis as well as a cyclical downturn), poor great power relations (especially in Russia’s relations with Europe and the United States and China’s relations with the United States and Japan); and wide-spread terrorism. These conditions make international cooperation difficult. Jin argues that this chaos originates in the disintegration of the Western-led world order, which brought stability to a world of anarchy. By 2016, the world had lost confidence in US authority, which was shaken by September 11th and further damaged by the 2008 financial crisis. The disintegration of the world order has led to anxiety, which has, in turn, led to the rise of populism.

Jin argues that the disintegration of the world order has arisen, in part, from US errors, particularly its mistaken belief that the Cold War ended because of the superiority of Western neo-liberalism, not because the USSR walked away. The US obsession with markets led to the gross lack of oversight that produced the 2008 financial crisis. Meanwhile, the United States’ poor judgement in launching the wars in Iraq and Afghanistan has taken its toll, and the power vacuum the United States left in Iraq and Libya has allowed for the rise of ISIS. (Jin attributes these mistakes to less restrained use of force by the United States since the Cold War, seemingly neglecting significant Cold War conflicts like the Vietnam War). A second factor in the deterioration of the existing world order is China’s economic rise, which has shifted the “global strategic center from the Atlantic to the Pacific.” With China’s rise, the structure of the international system is transitioning from “one superpower, many strong states” to “two superpowers, many strong states.” A third factor in the loss of order arises from the contradictions between Western and Islamic civilizations. Dissatisfied with the system’s ability to meet their needs, populism is rising in the West, resulting in nationalism, xenophobia, and anti-globalization sentiments. Meanwhile, the lack of modernization in the Islamic world has triggered the rise of extremism, terrorism, and migration.

To Jin, the future is uncertain. As neo-populism replaces the neo-liberalism of the United States and the United Kingdom, domestic politics are in flux. If they are unable to figure out how to benefit from globalization and instead become isolationist, Germany and China will take their place as the drivers of globalization. In light of this uncertainty at the international level, Jin urges China to seize the opportunity to undertake its domestic economic and industrial reforms and improve its domestic governance structures. At the same time, he argues that China should take an active role in global governance, which is currently threatened by global instability. As always, China must be guided by its core interests—but also expand its interests abroad.

Shi Yinhong began his speech by asking why so many in China held positive views of Trump prior to his election, noting Trump’s rejection of US values like pluralism and tolerance and his disdain for free trade and international cooperation. Shi argues that Trump won because he incited prejudice and xenophobia and mobilized “grassroots whites.” He describes the growth of populism, nationalism, and nativism in the United States, Europe, Turkey, and the Philippines.

In the context of rising populism, Shi argues, the world as we know it is reaching an end. After more than two decades during which states generally welcomed globalization, notwithstanding some negative effects, attitudes are changing. Shi believes that China will gain strategic and diplomatic opportunities as Trump weakens the positions of the United States and the West, especially in the medium to long term. However, he worries that China will fall victim to strategic overreach as it attempts to take advantage of the disintegrating world order. Consequently, he stresses that China must focus on domestic economic reforms and stability, and cautions that Trump’s ignorance about many issues will harm the global economy, US-China relations, and China’s economic growth.

Because China is vulnerable in economic and financial affairs, Shi argues that it must prepare to handle the challenges Trump could pose. Although many in China are eager to participate in US infrastructure projects, Shi argues that Trump will want to use US labor and capital. He anticipates that the Federal Reserve’s decision to raise interest rates and the already strong US dollar will attract global capital. If Trump succeeds in making the US economy great again, China will lose international influence. Shi is particularly concerned that China will lose its position as one of the leading drivers of global economic growth.

Shi then turns to the complicated state of great power relations, characterized by antagonism between Russia and the United States (or the West more generally), strategic competition between China and the United States in the Asia–Pacific, and the rapid improvement in China–Russia relations driven by these developments. Like most Chinese analysts, he expected Russia–US relations to improve with Trump’s election. In this context, Shi anticipated that China–Russia relations would face a complicated future. China’s relationship with Russia is important for its “strategic economy” approach (especially its OBOR policy), its “strategic military” policy, and its regional and global strategies. (For Shi’s analysis of China’s “strategic economy” and “strategic military” approaches, see the October 2016 Country Report on China.) China’s interests in importing Russian energy and investing in Russia’s infrastructure projects are key issues. In addition, Russia could limit China’s ability to implement the “Belt” portion of its OBOR plan. Meanwhile, Russia’s poor relations with the West impact China’s strategic military approach.

Shi concludes that closer China–Russia relations, especially on military affairs, are likely to negatively impact China in four ways. First, they will indirectly encourage a China–US arms race in the Western Pacific. Second, Russia’s support is likely to increase China’s evaluation of its own regional capabilities (increasing the threat of overreach). Third, closer China–Russia relations may intensify perceptions of China as a threat in Central Asia and Eastern Europe. Finally, Russia may drag China into global situations that are unrelated to its fundamental interests.

Indian Ocean Security Structure

In Guoji Luntan, No. 1, 2017, Li Hongmei argues that China faces a strategic dilemma in the Indian Ocean: its growing regional interests require it to undertake “modest operations,” but greater influence in the region will provoke increased structural pressure from India and the United States, whose bilateral relations have recently improved. Li first summarizes each state’s regional interests. The United States sees the Indian Ocean as part of its Asia–Pacific strategy. It seeks to ensure the freedom of the seas, prevent conflict, and promote adherence to international law. India wants to establish a “Monroe Doctrine” in the Indian Ocean to ensure its control of what it believes is its rightful “sphere of influence.” Although historically, India has been a land power, its rapid economic growth and expanding international interests have convinced many in India that the sea will be crucial in its efforts to achieve its “Great Power dream.” Finally, China is concerned with ensuring the security of SLOCs to ensure access to energy and other imports necessary to sustain its economic growth and political stability. The Indian Ocean also plays an important role in China’s 21st century maritime silk route, its efforts to become a strong sea power, and its extraction of natural resources from seabeds. In recent years, the United States has been the dominant power in the Indian Ocean while India enjoyed an “illusion of control.” China is a later-comer to the region. However, the coexistence of three powerful states in the Indian Ocean is unstable.

Li identifies three crucial changes in the security structure of the Indian Ocean. First, the United States and India are gradually developing a “strategic alliance.” The United States is increasing its military cooperation with India in an effort to make it a “net provider of security.” Meanwhile, India is using US support to advance its dream of become a great power and a strong maritime state. Li argues that the same concerns and motivations China has apply to India as well: in order to maintain rapid economic development and political stability, it needs energy imports, secure access to SLOCs, as well as a stable regional environment. India’s limited maritime experience and its concerns about China’s increasing regional influence make it receptive to US support. Although a de facto alliance is developing, Li argues that India will maintain some level of autonomy, because of its tradition of non-alignment and wish not to provoke China.

A second key change is shrinking US responsibility and the transformation of the Indian Ocean security structure from tripolar to bipolar. Drawing on Mearsheimer’s offensive realism, Li argues that the United States seeks to prevent China from replacing it as the regional hegemon by persuading India to bear the burden of checking China’s aspirations. In Li’s view, the declining power of the United States and the geographical presence of India in the region make reliance on India a natural strategy. As an offshore balancer, the United States will only intervene if India fails to contain Chinese influence. Consequently, the tripolar China–US–India structure is giving way to a bipolar China–India structure, in which the United States quietly supports India. The United States takes advantage of India’s maritime aspirations to achieve its own strategic objectives.

The third key change is the emergence of a new “competitive-cooperative” security structure. China’s increasing influence in the Western Pacific and its concern about the security of the Strait of Hormuz will draw it into the Indian Ocean, where its interests will compete with those of India. The lack of trust between India and China and the tendency of the United States to stir up trouble are likely to exacerbate the situation. Nevertheless, there is room for cooperation between India and China because of their shared interests, including the security of the SLOCs, regional peace and stability, combatting common threats like terrorism and piracy, and opposition to US regional hegemony.

According to Li, the regional security structure is changing for three main reasons. First, the decline in US power—triggered by the 2008 financial crisis, domestic uncertainties, and strategic overreach—means that it must rely on other actors to achieve its objectives. Declining military budgets will limit US deployments and its ability to implement its global strategy while driving US support toward burden sharing. (Li recognizes that the budget has increased since 2015, but does not acknowledge that US support for burden sharing long predates the decline in funding in the early 2010s). Alliances will play a crucial role in US efforts to maintain maritime hegemony. Second, India’s economic success makes it an attractive destination for overseas investments, while its democratic government makes Western democracies like the United States more eager to support it. Finally, India and the United States are both concerned about China’s increasing influence. Li argues that China is merely following its economic interests, but that policies like its port agreements with littoral states appear threatening to India. Meanwhile, India worries that it lacks the resources to invest sufficiently in its navy, while maintaining a strong army to respond to land-based concerns.

Li concludes with five policy recommendations for China. First, it should lessen India’s strategic concerns by acknowledging its regional contributions, without recognizing India’s right to dominate the Indian Ocean. Second, China should take advantage of areas of disagreement between India and the United States to drive them apart. Third, China should more actively pursue bilateral and multilateral security cooperation in the region on non-controversial issues like anti-piracy. Fourth, China should use its port agreements and its maritime silk route to strengthen economic cooperation and interdependence with littoral states. Finally, China should avoid strategic overreach.

India and OBOR

In Guoji Luntan, No. 1, 2017, Mao Yue draws on recent interviews in India to analyze why India has been hesitant to support China’s OBOR policy. Indian observers assess OBOR at three levels of analysis. At the international level, they see OBOR as a manifestation of US-China hegemonic competition and a Chinese attempt to construct a regional order alternative to that of the United States. At the regional level, they perceive OBOR as a Chinese attempt to encroach into India’s rightful sphere of influence by disguising their strategic pursuits as economic deals. They are critical of what they view as Chinese efforts to buy friends in the region without truly investing in these countries’ development or building person-to-person exchanges. At the national level, Indian analysts worry that China will ask India to join OBOR while infringing on India’s national interests in their border, the South China Sea, and regarding Pakistan, although they recognize that China’s national interests make compromise on these issues difficult.

Consequently, a debate has emerged within India on whether to join OBOR. Those who support joining OBOR argue that India should assess each project individually, that it would gain greater bargaining leverage if it joined because it would have better information, or that it would allow India to join the global economy and not be marginalized by trade agreements. These arguments share the view that joining OBOR advances India’s interests, and are not based on fundamental enthusiasm for OBOR itself.  Those who oppose joining OBOR include analysts from strategic circles who worry about the implications for sensitive areas and others who perceive OBOR proposals as overly ambitious, unattractive, Sinocentric, or unlikely to succeed. OBOR also competes with India’s own proposals, including Project Mausam, the “Look North” policy, and the “Spice Route” plan.

Mao argues that India’s identity and its role in the world also greatly influence its perceptions of OBOR. India wants to be a great power, but has not yet achieved this status. Its fear of antagonizing China prevents it from rejecting OBOR and its fear of irritating the United States prevents it from joining OBOR, resulting in an ambiguous response. In this context, India sees its response to OBOR as a manifestation of its response to US-China competition. Under the Obama administration, India–US relations strengthened dramatically, although differences had persisted.  Nevertheless, India is unwilling to choose one great power over another unless it feels its core national interests are threatened.

Particular characteristics of India’s approach to China also influence domestic objection to joining OBOR. First, India perceives itself as weak relative to China. It views itself as a victim and, in Mao’s view, exaggerates the China threat. Perceiving future bilateral relations to be uncertain, it seeks short-term objectives. Consequently, India expects China to give it immediate rewards for an agreement to join OBOR. Mao criticizes this “mentality of weakness,” arguing that India acts much stronger when facing weaker countries in South Asia. Second, India maintains a dualistic strategic culture that stresses both realism and morality. Indian observers object to Chinese efforts to buy political allies on ethical grounds. While recognizing the longstanding importance of morality in Indian strategic culture, Mao argues that this critique misunderstands Chinese intentions and argues that Modi has recently stressed national interests over moral obligations. Finally, Indian analysts hold a complicated view of China’s pursuit of great power status and its efforts to remake regional and global frameworks.

Although the two countries lack close relations, Indian analysts believe they should respect each other. Nevertheless, there is a distinct lack of mutual trust stemming from the 1962 border war and suspicions that characterize Chinese policies as a “hidden agenda.” Furthermore, although Indian analysts believe that they should learn from China’s economic success, they want to develop in their own way. Consequently, since the 1990s, Indian attitudes toward China have been characterized by an attempt to build closer economic ties, despite a lack of political trust; this tendency has become even more apparent since Modi took office. As a result, Indian analysts are indecisive about OBOR, which holds economic attractions, but makes them feel wary and jealous.

Mao concludes that China will be unable to improve Indian perceptions of OBOR and should focus on implementing concrete programs that will increase India’s dependence on China rather than seeking public statements of support for OBOR. Nevertheless, efforts to improve China–India relations at all levels, including cultural and people-to-people exchanges, may have a beneficial effect.

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