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Where’s the Tipping Point in U.S.-China Relations?

by Evan A. Feigenbaum
March 22, 2010

Photo Courtesy of REUTERS/Jason Lee

Some of my old State Department colleagues tell me that the current downturn in U.S.-China relations is nothing new.  It’s just countercyclical, they say.  “Remember the EP-3 incident?  A Chinese pilot was killed and an American aircrew held prisoner.”

True enough.  That was pretty bad.

“Or what about when we accidentally bombed China’s embassy in Belgrade and demonstrators trapped ambassador Jim Sasser inside the embassy while also attacking U.S. consulates?”

“Or how about when China bracketed Taiwan with missile tests in 1995 and the U.S. sailed the U.S.S. Nimitz up the Taiwan Strait in response?”

For that matter, what about Tiananmen Square?

My friends’ punch line seems to be this:  If you’ve been around long enough, you’ve seen worse in U.S.-China relations.  Much worse.  Maybe even catastrophically worse.  And by their logic, this, too, shall pass.

Maybe they have a point.  But I think they’re missing three very significant changes that could make this a tipping point in the up-and-down cycles that have characterized U.S.-China relations in the past.

First, there’s China’s sheer weight in the world, which has now grown to the point that Beijing has acquired the capacity to push back at American policies as never before.  China has said “no” plenty of times in the past.  But what’s new is the combination of interdependence and a more weighty China.  So while the administration has met some of this pushback with American counterpressure, China’s government seems lately to be probing and testing, exploring the possibilities and limits of Beijing’s strengthened capacity to say “no” to the United States.

Second, there’s the ongoing debate in China spawned by the recent financial crisis.   This has been a theme at meetings I’ve held in recent months with Chinese colleagues.  Some have reached sweeping (but, I think, badly exaggerated) conclusions about shifts in the balance of power, China’s “rise,” and America’s “decline.”  But at minimum, this sort of sentiment will feed domestic pressures in China.  Many, both in and out of China’s government, want to test what Beijing’s growing weight might yield.  They are confident of China’s growing strength.  They relish the opportunity to, at minimum, make Washington work harder for Chinese support of ostensibly shared objectives.  In some cases, they want to see if Washington will accommodate a wider array of Chinese interests.

Third, the domestic politics of U.S.-China relations seem to be changing.  This is true on the Chinese side:  Chinese exporters, for instance, are resisting calls for exchange rate revaluation, arguing that many companies will go under and China will suffer massive job losses.  But it is especially true on the American side, where the old political and business coalition may be fracturing.  Some of my old colleagues, I fear, may not appreciate the degree to which the politics of China policy might get away from this president and his administration.

I’ll be watching three things:

How deep are the fissures in the coalition that sustained U.S.-China relations in the past?  The American business community seems particularly conflicted.  Few are pulling out of China, but, for example, a new survey from the American Chamber of Commerce in China puts the percentage of U.S. companies that feel unwelcome in the Chinese market at 38 percent, up 15 points from 23 percent just two years ago in 2008.  And that sentiment extends beyond technology companies, like Google, into the manufacturing sector, with a variety of companies now complaining about a host of issues, from intellectual property theft to non-tariff barriers to various aspects of China’s regulatory regime.

How supple is the executive branch?  In the toughest times, it’s been presidents of both parties, Republicans and Democrats, who have, on a bipartisan basis, put the relationship back onto an even keel.  So is the administration strong enough to resist proposals that would ride the relationship completely off the rails?  As my former colleague Phil Levy has written, some ideas circulating in the Washington debate go beyond the U.S.-China relationship and would weaken global institutions, including the WTO and the IMF.

Finally, in what directions are the parameters of debate shifting?  China policy can’t be made in a vacuum.  Indeed, China has become the centerpiece of several debates that are much bigger than U.S.-China relations per se.  These include the future of American manufacturing, competiveness, and innovation; whether and how China’s rise challenges U.S. regional and global primacy; and what kinds of alliances, tie-ups, and arrangements best serve U.S. interests, including three decades of economic and commercial tie-ups with China that have included a heaping dose of technology transfer.

What certainly isn’t changing is that the United States and China are deeply interdependent.  But what is changing is that a growing number of influential people on both sides find that reality deeply disquieting.

Post a Comment 7 Comments

  • Posted by Chloe McCabe

    Thanks for this article. I have lived and worked in Beijing China for 5 years. I have seen and experienced the grossroot hatred towards Americans from the general publics from the brainwashed Chinese reporting and controls. Chinese government has intentionally set aside its citizens to “hate forigners” expecially Americans. They continue to review the history how China was oppressed by these countries, reenforcing them not to forget its shame. In my opinion, Chinese government will make Google “pay” for its shame and the losing face Google has caused them in the international communities. I think the only way to change China’s attitudes to play fair in the international market is that all foriegn companies need to voice out, not just staying quiet for the profits. In the end, they will all be losers in the eye of Chinese government.

  • Posted by CT

    Same here, from the US and have lived here for about 5 years. I totally agree with what you are saying. Unless companies take a stand and move money out of China nothing we say will make any difference, they only respond to power and view any other attempts as weakness.

  • Posted by Viki

    Rise of Chinese power somehow justifies the oppressive government.

    This has encouraged the communists to believe they are doing better than the democratic west or other democratic countries.

    The fact is companies looking at the profits are not ready to give a fight.
    This has to change to make China be a contender for a place in civilized society.

    WTO and other agencies should regret the fact now than never before to look the other way and facilitate chinese growth.

    This needs to be regulated and should be felt to chinese govt and their people to face reality.

    Economic zones can be developed in and around USA to deliver whatever china is exporting and those options should be implemented to balance trade gap.

    If a country does not stick to fair game in terms of wages and social justice the products thus consumed and profited is no different than “Blood Diamonds”. In fact it is worse because these jobs are being snatched away from rest of the world at the cost of feeding a monster.

  • Posted by Andre Michael Eggelletion

    As long as the United States has no choice but to continue to run such huge deficits and precipitously increase its national debt, our ability to martial a sufficient level of soft power in U.S./Chinese relations will become increasingly compromised.

    But perhaps before the tipping point in U.S./Chinese relations arrives, the Chinese may hobble and weaken themselves enough through their own creation of asset bubbles, like in their current real estate sector, to be forced into a more collegial construct. For those who may not be aware of what I’m referring to; Beijing’s residents on average are paying as much as $200,000, or eighty times their average annual income for a tiny 1,100 sq/foot apartment. Contrast this with China’s per-capita income data from the CIA’s World Fact Book: the 2009 estimate on per-capital income in Hong Kong is $29,600 per year; the 2003 estimate in Taiwan is $15,600 annually; and the 2009 estimate on the Peoples Republic of China is only $3,600 per year. In short, the hyper-development of China’s residential real estate infrastructure is not only unaffordable and unsustainable, but it could constitute an incident of global significance. Based on previous actions in dealing with the global economic crisis, I have to wonder, how high is the probability that the many nations struggling to recover from recession will be forced to co-sign a bailout of China’s real estate sector?

    In the final analysis, as an example, just as the EU has learned how important it is that each member practice fiscal responsibility, or stand ready to bail out a reckless neighbor; and trade as well as monetary officials have also learned that the situation in Greece can not be repeated if experiments in regional monetary integration are to survive; in like manner, China’s monetary and trade policy must reflect a meaningful appreciation of how their fate is linked to ours. President Nixon’s assessment of U.S./Soviet relations are a good correlation. He said “the United States and the Soviet Union can never be friends, but we can not afford to be enemies.” The same goes for international relations under a global economy. The issues may be different today with China than they were with the Soviets but the principle is the same; if we go down they go down and vice versa. Therefore, equilibrium must be established in the global economic order if any nation expects to survive. The tipping point isn’t only about a deterioration of diplomatic and economic relations between the Washington and Beijing; that’s only the micro. The macro tipping point is about globalism’s rising tide; whether or not even the biggest boats avoid floundering and being destroyed upon the rocks.

  • Posted by Josie nguyen

    “… that Beijing has acquired the capacity to push back at American policies as never before…”
    So, is it that when the US can push other countries around then there is no problem, but when other countries start pushing back somehow it becomes a problem?
    Mr. Feigenbaum, are you saying that the US has a God given right to push other countries around? And if any country starts pushing back the US’s pushing people around, it becomes a God ladden problem? The US-China problem is ENTIRELY a matter of the US’s OWN making – America’s self-righteous attitude towards the world is the world’s biggest problem.

  • Posted by Sudhakaran

    It appears to me as a detached foreigner (i.e. – non American and non Chinese)that Americans are always looking towards the horizon for the next implacable competitor. It was the Soviet Union before and now the landscape is being shaped to cast China into that position. America is a unique country in the temporal global order and no country will be able to truly challenge American hegemony. Whether Washington wants to use that hegemonic position for the positive or the negative is a different narrative altogether. But it is of little doubt that America will enjoy a preponderant role. America’s strength can only be lost from within. China is a country of multiple contradictions and its exposure to the international system will slowly unravel those dissenting notes. But for the sake of the Chinese people and the world, I hope it is not cataclysmic.

  • Posted by marco mayer (florence university)

    I agree on Evan A. Feigenbaum final statement: “What certainly isn’t changing is that the United States and China are deeply interdependent. But what is changing is that a growing number of influential people on both sides find that reality deeply disquieting.”

    This outcome is not surprising as an excessive degree of interdependency affects both political actors and can be dangeruos. What I predict is that both parties will try to reduce the level of interdipendence in order to increase their freedom both in foreign and domestic affairs. The crucial question is if the US government and the Chinese leadership are ready and capable to move in this direction. What do you think?

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