China’s Made-in-America Success Story

Column internationally distributed by Project Syndicate. September 2012

America’s strategy in Asia for more than a century has sought a stable balance of power to prevent the rise of any hegemon. Yet the United States, according to its official National Security Strategy, is also committed to accommodating “the emergence of a China that is peaceful and prosperous and that cooperates with us to address common challenges and mutual interests.” So America’s Asia policy has in some ways been at war with itself.

In fact, the US has played a key role in China’s rise. For example, rather than sustain trade sanctions against China after the Tiananmen Square massacre in 1989, the US decided instead to integrate the country into global institutions. But US foreign policy had been notable for a China-friendly approach long before that.

In 1905, President Theodore Roosevelt, who hosted the peace conference in Portsmouth, New Hampshire, after the Russo-Japanese War, argued for the return of Manchuria to Manchu-ruled China and for a balance of power in East Asia. The war ended up making the US an active participant in China’s affairs.

After the Communists seized power in China in 1949, the US openly viewed Chinese Communism as benign, and thus distinct from Soviet Communism. And it was after the Communists crushed the pro-democracy movement in 1989 that the US helped to turn China into an export juggernaut that has accumulated massive trade surpluses and become the principal source of capital flows to the US.

America’s policy toward Communist China has traversed three stages. In the first phase, America courted Mao Zedong’s regime, despite its 1950-1951 annexation of Tibet and domestic witch hunts, such as the Hundred Flowers Campaign, the brief liberalization that many Western observers believe was a ploy designed to flush out opponents. Courtship gave way to estrangement during the second phase, as US policy for much of the 1960’s sought to isolate China.

The third phase began immediately after the 1969 Sino-Soviet military clashes, with the US actively seeking to exploit the rift in the Communist world by aligning China with its anti-Soviet strategy. Although China clearly instigated the bloody border clashes, America sided with Mao’s regime. That helped to lay the groundwork for the China “opening” of 1970-1971, engineered by US National Security Adviser Henry Kissinger, who until then had no knowledge of the country.

Since then, the US has pursued a conscious policy of aiding China’s rise. Indeed, President Jimmy Carter sent a memo to various US government departments instructing them to help in China’s rise — an approach that remains in effect today, even as America seeks to hedge against the risk that Chinese power gives rise to arrogance. Indeed, even China’s firing of missiles into the Taiwan Strait in 1996 did not change US policy. If anything, the US has been gradually loosening its close links with Taiwan, with no US cabinet member visiting the island since those missile maneuvers.

Seen in this light, China’s spectacular economic success — including the world’s largest trade surplus and foreign-currency reserves — owes much to US policy from the 1970’s on. Without the significant expansion in US-Chinese trade and financial relations, China’s growth would have been much slower and more difficult to sustain.

Allies of convenience during the second half of the Cold War, the US and China emerged from it as partners tied by interdependence. America depends on China’s trade surplus and savings to finance its outsize budget deficits, while China relies on its huge exports to the US to sustain its economic growth and finance its military modernization. By plowing more than two-thirds of its mammoth foreign-currency reserves into US dollar-denominated assets, China has gained significant political leverage.

China is thus very different from previous US adversaries. America’s interests are now so closely intertwined with China that a policy to isolate or confront it is not feasible. Even on the issue of democracy, the US prefers to lecture other dictatorships rather than the world’s largest autocracy.

Yet it is also true that the US is uneasy about China’s not-too-hidden aim to dominate Asia — an objective that runs counter to US security and commercial interests and to the larger goal of securing a balance in power in Asia. To avert Chinese dominance, the US has already started to build countervailing influences and partnerships, without making any attempt to contain China.

For the US, China’s growing power actually helps to validate its forward military deployments in Asia, maintain existing allies in the region, and win new strategic partners. Indeed, an increasingly assertive China has proven a diplomatic boon for the US in strengthening and expanding its Asian security relationships.

The lesson is clear: The muscle-flexing rise of a world power can strengthen the strategic relevance and role of a power in relative decline. Barely a decade ago, the US was beginning to feel marginalized in Asia, owing to several developments, including China’s “charm offensive.” But now America has returned firmly to center stage. South Korea has beefed up its military alliance with the US; Japan has backed away from an effort to persuade the US to move its Marine base out of Okinawa; Singapore has allowed the US Navy to station ships; Australia is hosting US Marine and other deployments; and India, Vietnam, Indonesia, and the Philippines, among others, have drawn closer to the US as well.

But no one should have any illusions about US policy. Despite America’s “pivot” to Asia, it intends to stick to its two-pronged approach: seek to maintain a balance of power with the help of strategic allies and partners, while continuing to accommodate a rising China.

Brahma Chellaney, Professor of Strategic Studies at the New Delhi-based Center for Policy Research, is the author of Asian Juggernaut and Water: Asia’s New Battleground.

(c) Project Syndicate, 2012.

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