The top ten unicorns of China policy

A unicorn is a beautiful, make believe creature. But despite overwhelming evidence of its fantastical nature, many people still believe in them. Much of China policy is also underpinned by belief in the fantastical: in this case, soothing but logically inconsistent ideas. But unlike unicorns, our China policy excursions into the realm of make believe could be dangerous. Crafting a better China policy requires us to identify what is imaginary in our thinking about China. Author James Mann captures some in his book.

Here are my own top ten China policy unicorns:

1) The Self-Fulfilling Prophecy. This is the argument that has the most purchase over our China policy. Treat China like an enemy, the belief goes, and it will become an enemy. Conversely, treat China like a friend and it will become a friend. But three decades of U.S.-China relations should at least cast doubt on this belief. Since the normalization of relations with China the aim of U.S. policy has been to bring China "into the family of nations." Other than China itself, no nation has done more than the United States to improve the lot of the Chinese people and to welcome China’s rise peacefully. And, rather than increase its deterrence of China — a natural move given the uncertainty attendant to the rise of any great power — the United States has let its Pacific forces erode and will do so further. We may soon go through our third round of defense cuts in as many years. Here is just one example of how unserious we are about China: As China continues to build up its strategic forces, the United States has signed a deal with Russia to cap its strategic forces without so much as mentioning China. Unless Beijing was insulted by this neglect, surely it could take great comfort in an anachronistic U.S. focus on arms control with Russia. But despite our demonstrations of benevolence, China still views the United States as its enemy or, on better days, its rival. Its military programs are designed to fight the United States. The self-fulfilling prophesy is far and away the most fantastical claim about China policy and thus the number one unicorn.

2) Abandoning Taiwan will remove the biggest obstacle to Sino-American relations. Since 2003, when President Bush publicly chided then-Taiwanese President Chen Shui-bian on the White House lawn with Chinese Premier Wen Jiabao at his side, the United States has been gradually severing its close links with Taiwan. President Obama’s Taiwan policy has been the logical dénouement. Arms sales have been stalled, no Cabinet members have visited Taiwan since the Clinton years, and trade talks are nonexistent: there is essentially nothing on the U.S.-Taiwan policy agenda. The reaction from China? Indeed, it has moved on. But rather than bask in the recent warming of its relationship with Taiwan, China has picked fights with Vietnam, the Philippines, Japan, South Korea, and India. It does not matter what "obstacles" the United States removes, China’s foreign policy has its own internal logic that is hard for the United States to "shape." Abandoning Taiwan for the sake of better relations is yet another dangerous fantasy.

3) China will inevitably overtake the U.S. and we must manage our decline elegantly. This is a new China policy unicorn. Until a few years ago, most analysts were certain there was no need to worry about China. The new intellectual fad tells us there is nothing we can do about China. Its rise and our decline are inevitable. But inevitability in international affairs should remain the preserve of rigid ideological theorists who still cannot explain why a unified Europe has not posed a problem for the United States, why post-war Japan never really challenged U.S. primacy, or why the rising United States and the declining Britain have not gone to war since 1812. The fact is China has tremendous, seemingly insurmountable problems. It has badly misallocated its capital thanks to a distorted financial system characterized by capital controls and a non-market based currency. It may have a debt to GDP ratio as high as 80 percent thanks again to a badly distorted economy. And it has created a demographic nightmare with a shrinking productive population, senior tsunami, and millions of males who will be unmarriageable (see the pioneering work of my colleague Nick Eberstadt).

The United States also has big problems. But we are debating them vigorously, know what they are and are now looking to elect the leaders to fix them. China’s political structure does not yet allow for fixing big problems.

4) (Related to 3). China is our banker. We cannot anger our banker. In fact, China is more like a depositor. It deposits money in U.S. treasuries because its economy does not allow investors to put it elsewhere. There is nothing else it can do with its surpluses unless it changes its financial system radically (see above). It makes a pittance on its deposits. If the U.S. starts to bring down its debts and deficits China will have even fewer options. China is desperate for U.S. investment, U.S. treasuries, and the U.S. market. The balance of leverage leans towards the United States.

5) We are engaging China. This is a surprising policy unicorn. After all, we do have an engagement policy with China. But we are only engaging a small slice of China: the Chinese Communist Party (CCP). The party may be large — the largest in the world (it could have some 70 million members). We do need to engage party leaders on matters of high politics and high finance, but China has at least one billion other people. Many are decidedly not part of the CCP. They are lawyers, activists, religious leaders, artists, intellectuals, and entrepreneurs. Most would rather the CCP go quietly into the night. We do not engage them. Our presidents tend to avoid making their Chinese counterparts uncomfortable by insisting on speaking to a real cross section of Chinese society. Engagement seen through the prism of government-to-government relations keeps us from engaging with the broader Chinese public. Chinese officials come to the United States and meet with whomever they want (usually in carefully controlled settings, and often with groups who are critical of the U.S. government and very friendly to the Chinese government). U.S. leaders are far more cautious in choosing with whom to meet in China. We do not demand reciprocity in meeting with real civil society — underground church leaders, political reformers and so on. China has a successful engagement policy. We do not.

6) Our greatest challenge is managing China’s rise. Actually, our greatest challenge will probably be managing China’s long decline. Unless it enacts substantial reforms, China’s growth model may sputter out soon. There is little if nothing it can do about its demographic disaster (will it enact pro-immigration policy?). And its political system is too risk averse and calcified to make any real reforms.

7) China’s decline will make our lives easier. China’s decline may make the challenge for the United States more difficult for at least a generation. It could play out for a long time even as China grows more aggressive with more lethal weaponry (e.g., what to do with surplus males?). Arguably both Germany and Imperial Japan declined beginning after World War I and continuing through the disaster of World War II. Russia is in decline by all useful metrics. Even so, it invaded a neighbor not too long ago. A declining, nuclear-armed nation with a powerful military can be more problematic than a rising, confident nation.

8) We need to extricate ourselves from the "distractions" of the Middle East and South Asia to focus on China. This is a very popular unicorn among the cognoscenti. But how would this work? As Middle Easterners go through a historic revolution that could lead to the flowering of democracy or the turmoil of more extremism, how do we turn our attention elsewhere? Are we supposed to leave Afghanistan to the not-so-tender mercies of the Taliban and Pakistani intelligence? This view is particularly ironic given China’s increased interests in the Middle East and our need for a partnership with India to deal with China. There is no way to create the kind of order we wish to see in Asia without exerting a great amount of influence over the oil producing states in the Middle East and by allowing India to become tied down in a struggle in South Asia. We are the sole superpower, our foreign policy is interconnected. "Getting Asia right" means "getting the Middle East and South Asia right."

9) We need China’s help to solve global problems. This is further down on my list because it is not really a fantastical unicorn. It is true. What is a fantasy is that China will be helpful. We do need China to disarm North Korea. They do not want to, and North Korea is now a nuclear power. The same may soon be true with Iran. The best we can get in our diplomacy with China is to stop Beijing from being less helpful. It is a fact that the global problems would be easier to manage with Chinese help. However, China actually contributing to global order is a unicorn.

10) Conflict with China is inevitable. A fair reading of the nine "unicorns" above may lead to the conclusion that we are destined to go to war with China. It may be a fair reading, but it is also an inaccurate one. Sino-American relations will be determined by two main drivers; one we can control, the other we cannot. The first is our ability to deter aggressive Chinese behavior. The second is how politics develop in China. The strategic prize for Washington is democratic reform in China. Democracy will not solve all Sino-American problems. China may be very prickly about sovereignty and very nationalistic. But a true liberal democracy in China in which people are fairly represented is our best hope for peace. The disenfranchised could force their government to focus resources on their manifold problems (corruption, misallocated resources, lack of social safety net). The United States and the rest of Asia will certainly trust an open and transparent China more, and ties would blossom at the level of civil society. Historically, the United States has almost always been on China’s side. It is waiting patiently to do so again.