Sunday, March 15, 2015

What's in it for America to get along with China

This blog is based on a presentation I gave at the Jackson School of International Studies, University of Washington, Seattle. The script for each slide followed the slide. There were eight slides including the title slide.
I began working with American companies in China as early as 1978. It’s been a privilege for me to witness China’s unprecedented and remarkable transformation from the ground level. However, what I have to say today didn’t just come from my own observations and experience, I draw heavily from many highly regarded authorities.
What these sources have in common is that they have a deep understanding of China and frequently present perspectives not found in America’s mainstream media. I believe it is crucially important that the American public in a democracy come to see the many sides of the bilateral relations and not just the popular and in my view frequently distorted and skewed perspective.

Up to now conversations about China run from what’s wrong with China to what’s right, from China as a potential enemy to why China is not. Some say China is massive violator of human rights and the counter argument say the accusation does not jive with a country that has pulled hundreds of million people out of poverty. Some predicted the collapse of China decades ago, a prediction that has been repeated recently. These tend to be American voices. Others around the world see China differently, even as possible alternative model for emulation.

If we change the focus of the conversation about China to simply addressing the issue from our self-interest point of view, then which pundit is right or wrong becomes irrelevant. What I would like to propose today is that we take a selfish point of view and see what’s in it for America to be a friend of China.  What constitutes our own national interest should give us common ground and domestic harmony.
I can think of four important reasons to be a friend of China, but before I get into those four reasons, I would like to quickly make the point (and get this out of the way) as to why China is not and cannot be a potential adversary of the U.S.

Why China can’t be an adversary is actually rather obvious. We have a thousand military bases, give or take, large and small, all around the world. China has none.

China has pledged that they would not use their nuclear weapons against nations that do not have nuclear weapons. Furthermore, they have pledged “no first use,’ meaning that they would not unilaterally launch nuclear weapons but would only strike back against whoever launch the first attack. The United States have not acknowledged they understand China’s position and, of course, the US has not made any similar pledge. In fact, the US reserves the right to launch the first strike.

In the last decade, the US has invaded and occupied more countries than China has in 5000 years. Ironically the people that believe it is in our national interest to occupy other countries tend to be the same people that believe China is capable and ready to attack us.

Actually leaders in Beijing are well aware of the asymmetric imbalance of military might between the two countries. The American ability to shock and awe China far outweigh China’s ability to reply in kind, and China has no interest in putting the uneven firepower to the test.
The first of four reasons for the US to be a friend of China is very simply we can’t afford to take on a new enemy for no good reason.

Take a look at the left side of this slide, which has a list of all the hot spots in the world from roughly north to south. To a greater or lesser degree, the US has a presence and involvement in all those areas of the world. Our foreign policy says that maintaining stability in every part of the world is in our vested national interest. So far our national interest in Afghanistan and Iraq has cost us, depending on who is doing the guesstimating anywhere from 3 to 6 trillion dollars.

Looking at other regions of unrest on this list, we can see no end in sight to the turmoil. In fact the ethnic and jihadist related violence is only growing and no sign of abating.

On the right side of this slide, I have made a quick and rough accounting of how our federal government spending is allocated. By far the largest portion of the discretionary spending, over $500 billion per year, goes to defense. When you added the cost of veteran services to this bill, the tab is closed to $1 trillion.

On top of the defense related spending, we are expecting to pay a quarter of a trillion dollars to service our national debt and to make up for the budgetary shortfall, we’ll need to borrow an additional half a trillion or more.

At this point our national debt is over $18 trillion and it will continue to rise. The point of this slide is that the U.S. has plenty to worry about around the world and to put out all the brush fires or even bigger conflagrations, the over extended U.S. budget would have to borrow even more. It does not make sense to me that Washington would have to ask Beijing for another loan so that we can beef up our military against China.
The second reason for being a friend of China is that China has a very different approach to international relations and can get things done that’s not possible by the American approach. Before giving you some examples of how China can accomplish certain international goals that the US cannot, let me summarize in this slide some the major differences in style to explain how these differences can lead to different outcome.

This slide compares some of the major differences between the US and China. The first bullet points out that the US, as the self acknowledged leader of the world, goes by the “my way or the highway” approach. China does not. Instead, China is always pushing for international cooperation and working within the United Nations charter.

Of the five permanent members of the Security Council, China has contributed more peacekeeper troops than the other four combined. Even here China has been very cautious, contributing engineering and medic soldiers and military police and avoided sending any weapon toting soldiers until recently.

Secondly, the US sees itself as the model for democracy and insists that democracy is the only acceptable form of government. Even so American attempts to introduce the democratic form of government in Afghanistan and Iraq could hardly qualify as raging successes. Lack of a winning track record has not kept our Secretary of State and us from energetically proselyting around the world on the virtues of democracy.

From TED Talk, Dambisa Moyo, a British educated economist from Zambia points out that even though roughly half of the countries in the world are considered to be democracies, seven out of 10 of these countries are what she called illiberal democracies. An illiberal democracy, subject to a variety of definitions, is one where the citizens get to vote but the votes don’t count, where there is freedom of speech but you have to be careful in how you exercise such freedom, you have access to news but all the media is state owned, and so on. Essentially illiberal democracy doesn’t work. I call it “shamocracy.”

China does not claim to be a democracy and they are frankly not too interested in the form of government they are dealing with. They respect the sovereignty of other countries and pretty much hewed to the principal of not interfering with the internal workings of any government. 

As I pointed out in the earlier slide, the US has military presence that ring around the world. China has not. Only in recent year or so that China’s navy has joined other countries on anti-piracy patrols in the Arabian Sea around the horn of Africa.

Whether it’s cyberspace or somebody’s airspace, the US asserts the right to surveillance anywhere and anytime they please. Mostly because they have the superior technology and therefore they can. So far as we know, China has not been flying spy planes over anybody else’s airspace. We don’t really know the extent of their cyber spying since the only reports we get are one sided from the likes of NSA and network security protection firms with vested interests in selling their services. Thanks to Snowden and other revelations, we do know that the US has the world’s best technology and does as much if not more cyber hacking than the rest of the world.

American foreign aid tends to come with strings attached whereas China is more likely to make investments where both the host country and China can mutually derive benefits. It’s true that some of the countries that China does business with can have leaders of rather unsavory character. But the US has also been known to give foreign aid to countries with doubtful regimes and overlook flaws of conduct merely because the national interests are aligned.

The real major difference is that cash is frequently part of the US package and cash is easy to divert into personal pockets and encourage corrupt practices. China’s deals tend to be non-cash based projects such as building roads, schools and hospitals. In Africa, for example, China has been more favorably regarded by the countries there than the US.
So what are some of the things China can do better than the U.S? How each dealt with the Ebola scare in West Africa is one straightforward example. While the US flew some of the patients to the US to get special therapy using as yet unproven anti-serum. China sent medical teams from China to work on the ground to help isolate the virus from contagion reaching epidemic proportions. Included in their mission of 6000 persons with 800 medical experts was to train 10,000 locals to deal with this disease for the long term. This turned out to be one occasion where President Obama did acknowledge and thank China for their humanitarian action.

After the American withdrawal from Afghanistan, China moved in to organize meetings between the new government headed by Ashraf Ghani and the Taliban. Both parties have enough confidence in China as an honest broker to agree to meet and hold conversations about the future of the country. This development was even reported on The New York Times and the front page of the Wall Street Journal including a thank you acknowledgement from the Obama administration.

I believe the Korean peninsula represents the most important example of what collaboration can achieve.

From the Clinton Administration to this day, the American side has always pushed for 6 party talks as a venue to negotiate and discourage North Korea from developing the nuclear bomb. Invariably just when we think the six-party conference is about to take place, the North Koreans find some maneuver to torpedo the meeting. Just as invariably, the Americans would throw their hands up in frustration and disgust and say to China, “you have the most influence on North Koreans, making them behave is your problem.” I know I am simplifying the history but the generalization will suffice for what I want about to suggest.

The North Koreans know full well that they have China in a conundrum. Even though the North Korean economy depends on China for life support, they know that China can’t afford to let the regime implode because under the existing treaty between South Korea and the U.S. If South Korea were to unify the peninsula then American troops can be stationed right on the Yalu River. Based on history and China’s relations with the U.S., China could never accept having American GIs on their border. In other words, China needs North Korea as a buffer from the American troops.

But what if Obama were to say to Xi Jinping that when and if the peninsula were to unify under the South Korean regime, the U.S. would immediately take all its troops off the peninsula? Think what would happen to North Korea if this becomes a binding understanding between China and the U.S. They could no longer blackmail China into continuing the lifeline in support of North Korea. They would have to behave and negotiate with the other parties and reach some kind of agreement on a nuclear free Korean peninsula.

It’s well known that Xi Jinping does not care for Kim Jong-un and gets along fine with President Park of South Korea. (He has met Park 6 times since taking over as head of China to zero with Kim.) What’s more, China is already South Korea’s biggest trading partner and China is where South Korea has made their largest foreign investments. South Korea is one of most popular travel destinations for Chinese tourists and South Korea K-pop and historical TV soaps enjoy wide following in China. The just concluded bilateral Free Trade Agreement will surely bring the two parties even closer together. One could even suggest that China-S. Korea relation is as good as any bilateral relation in the world!

The treaty between South Korea and the U.S. dates back to 1953 after the Korean conflict. It was to protect the south from the north. Since then South Korea has economically surpassed the north by orders of magnitude and would be quite capable of defending itself. Since at least 2006, questions were raised inside South Korea on whether the military treaty with the U.S. has become obsolete or at least unnecessary.

Just think if U.S. and China can build up enough mutual trust and confidence in each other’s intentions, the U.S. can save the yearly cost of posting 30,000 troops in South Korea, and in exchange finally attain a peaceful and nuclear free Korean peninsula--A goal that has eluded at least the last three presidents.

It goes without saying issues like global warming, anti-terrorism and cyber crime are all going to be easier to combat with the powers working together than not. We saw some indication of progress being made from the joint announcement between Obama and Xi last November after the Beijing conference of 20 nations.
As I alluded in an earlier slide, China has become a major source of foreign direct investments particularly for infrastructure around the world. By becoming a friend of China, the U.S. would have the opportunity to leverage from some of those investments and not have to expend our own resources in other cases.

This slide has a somewhat random selection of deals China has entered recently, not all directly affect American interest. The top one is most obviously not directly related to the U.S. In fact, you could say China was the beneficiary of American pressure on Russia, forcing Russian into the pipeline deal with China. Without the sanction and threat of sanction imposed by the U.S. on Russia, Russia may not have been so quick to strike a deal with China but would have looked for other buyers for their natural gas.

At the November APEC summit, Xi Jinping proposed the Asia Pacific basin as a free trade zone and 21 countries were quick to sign up. Rather than devoting resources and energy to push for Trans Pacific Partnership, it seems to me Obama would be better off dropping the moribund TPP idea and go along with the economic coalition proposed by Xi.

Before the APEC summit, China announced the formation of the Asian Infrastructure Investment Bank, supported by most of the Asian countries. While one can see the infrastructure bank as a potential rival to the World Bank and the IMF, it can also be seen as complementary or supplemental to the resources of the older more established banks. [Since my talk, the UK government has decided to become a founding member of AIIB incurring the displeasure of the Obama Administration. It would appear that the Cameron Administration has decided that aligning with China is in UK’s national interest.]

At the same November summit, Xi Jinping also announced the land based and maritime Silk Road initiatives (most commonly regarded as one belt/one road initiative). The idea of those initiatives is to promote and enhance economic development along the route. The land based goes thru central Asia all the way to Amsterdam and the maritime goes along the coasts of South Asia to the Middle East and beyond. All the countries along the route have been keenly interested in the possibilities of riding the crest of economic development. While not directly beneficial to the U.S. economy, the wealth generated along the route means those countries will become customers of American goods.

The last three items represent how the U.S. can benefit directly. The US has run out of money for space exploration while China is getting ready to send astronauts to the moon. It would make a lot of sense if the two countries were to collaborate and explore the universe together.

Investors from China are beginning to invest in the U.S. With friendlier relations, the flow of inbound investments from China could turn into a torrent.

Similarly, China is already the largest source of tourists going abroad and not only that, they are also the highest per capita spenders. Giving reciprocating 10-year, multi-entry visas was one of the brilliant moves by the Obama administration. Again as the two countries grow closer together, the number of visitors will increase.

Needless to say, both inbound investment and tourism will directly benefit the US economy.

Right now this is just a dream but according to railroad building experts in China, China already has the technology to build a high-speed train from China, over Siberia, under the Bering Sea and down Alaska, Canada to the U.S. The most challenging part is the 120-mile tunnel under the sea and China expert is confident that they already know how to do this. The 220 mph train can go from Beijing to San Francisco in about two days. The carbon footprint per passenger compared to flying is nearly one tenth. Four-country friendly relations would turn this dream into reality.
By avoiding the Thucydides trap, namely the alleged inevitability of conflict between a rising power and a reigning power, what value can we put on that? To quote a popular credit card commercial: priceless. What more do I need to say?
Recent Gallup poll of the American public revealed that China is no longer perceived as America’s number 1 enemy, a ranking China held as recently as two years ago. Now reality has intruded and Russia and ISIS have taken over as greater threats. So this may be a good timing to change the way we look at China. My last slide on what the U.S. needs to do to become a friend of China is based on a simple premise. Namely to become friends, we need to treat China as a peer and as an equal partner.

Certain congressional members on both sides of aisle like to criticize and tell China what they should or should not be doing. They do not necessarily know what they are talking about but they know that they will get ink and possible exposure on local and national TV.

A corollary to the first rule is that genuine disagreements, and there are certainly many, should be discussed and resolved in private meetings. While more of these meetings are taking place, we should be mindful that disputes voiced in public become hardened and difficult to resolve.

To my knowledge, China has not conducted any surveillance flights off the West Coast of the U.S. Other than acting as an irritant to China, I question the benefits of our surveillance flights off the coast of China. On the basis of mutual respect between peers, it would make sense to stop our flights.

President Obama recent visited Stanford to begin a national dialogue on cyber security and he emphasized that the government and the private sector can’t fight hacking on their own but need to work together. The same logic applies to the need for cooperation between nations. China and the US need to sit on the same side of the table in order to more effectively deal with the cyber criminals. Accusing each other merely allows the criminals to run amuck.

It’s becoming increasingly obvious that the civilized world face a common threat in the brutal jihadists movement. It is also clear that to effectively counter and contain the Islamic radicals, it would take the cooperation of all the sovereign nations. In that context, it does not help for the U.S. to somehow regard China’s terrorists as something less than bona fide terrorists.

Lastly, we need to appreciate that the Cold War is over and China is not looking to be the opponent of the next cold war. The neoconservatives in this country had thought that with the collapse of the former Soviet Union, it was time for the U.S. to dominate the world. Unfortunately from the fringe, they moved into the center of power with the election of George W. Bush. We are still paying for their hubris.

I hope we can start a new conversation about China because we need to save our country from a disastrous trajectory that could terminate the rich and powerful economy, as we know it, all because of foolish policies of our own making.