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2018-11-04
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??Can China-U.S. Relations Step Back From theEdge?
??Fu Ying
??Visiting the U.S. recently, I was told by virtually every American I met that attitudes toward China had shifted. This phenomenon, they claimed, cut across bipartisan lines as well as government, business and academic circles. The U.S. was frustrated at not having shaped China in its own image, despite bringing the country into the World Trade Organization and helping to enable its economic takeoff. Instead, China had �ripped off� the U.S. by taking advantage of it in trade and business. There was concern at how fast China was climbing up the global economic and technological ladder, and that its military was threatening to �elbow out� the U.S. from Asia.
??Although attitudes may have changed, I�m not convinced they�ve settled yet. Judging from American history, major strategies are usually shaped through trial and error, in response to specific challenges. Consensus develops along the way. Any adjustment in the U.S. posture toward China will therefore take time. This also means that the final outcome will be affected by how the two countries act and react in the coming months and years.
??In evaluating next steps, the Chinese people first have to ask whether U.S. criticisms are fair. It�s true that economic growth hasn�t produced in China a political system similar to the U.S.�s. Interestingly, I recall attending an American government program in the mid-1990s designed for diplomats from developing nations. The topic was U.S. security strategy and policy-making. I had one question: What were America�s strategic objectives for the post-Cold War era? The answer was unambiguous: to promote U.S.-style democracy and human rights worldwide. And indeed, the U.S. has pursued those goals consistently over the last two decades, at huge cost to itself and others.
??China isn�t America�s only failure � nor the worst one. In fact, given what�s happened to some countries since the �color revolutions� and the �Arab Spring,� the U.S. should be thankful that its efforts haven�t thrown China into political turmoil and economic chaos. The fact that China has maintained social and political stability and followed its own economic path has contributed to global economic growth, especially after the 2008 financial crisis. Rather than draining U.S. finances the way the nation-building efforts in Iraq and Afghanistan have, China has added greatly to American prosperity.
??True, China�s fortunes have risen as well. Taking advantage of the globalization promoted by the U.S. and Europe, hardworking Chinese gained access to global capital, technologies, expertise and markets, all of which facilitated the growth of industry. Hundreds of millions of Chinese came out of poverty, and living standards in the country have risen substantially.
??But it�s important to remember two things. First, Chinese workers paid a steep cost for these developments, just as American workers did. After entering the World Trade Organization, Chinese enterprises were suddenly thrown into direct competition with global peers. Many of them didn�t survive, leading to huge layoffs all over the country. At the same time, more than 2,000 laws and regulations had to be revised or abolished at the national level and about 190,000 more at the local level, causing widespread dislocation.
??Second, China�s gains have benefited the U.S. as well. According to Oxford Economics, U.S.-China trade helps each American family save $850 every year. Between 2001 and 2016, U.S. commodities exports to China expanded five times, much higher than the 90 percent average increase. The advent of the �internet of things� and rapid growth in the number of China�s middle- and upper-class consumers will offer even more opportunities for U.S. companies. China is not only an integral part of the global economy, but also an indispensable source of growth. Any attempt to �decouple� it from the U.S. or the global economy will hurt all countries, including the U.S.
??So what should China�s response be? The Chinese have to stay cool-headed in the face of tough but confusing messages from the U.S. We must stay focused on China�s development, and overcome our own difficulties.
??China is not adopting a more confrontational stance toward the U.S. Its current attitude is part of its overall foreign policy, which is aimed at ensuring a sound environment that facilitates effective cooperation with the outside world to serve China�s development goals. For its purposes, there�s every reason for China to maintain an attitude of �constructive cooperation� with the U.S.
??In fact, changes in U.S.-China relations may help to push China�s own desired reforms. Some requests raised by U.S. companies, such as increased market access, dovetail with recommendations from China�s leaders. The government is, in fact, opening up: Eight out of the 11 market-opening measures announced by President Xi Jinping in April have been put in place, covering banking, securities, insurance, credit rating, credit investigation and payment, and so on. The government is also working harder to improve the business environment and strengthen intellectual property protections for both Chinese and foreign enterprises. Chinese reformers can turn outside pressure to their advantage, using it to bust through internal resistance to necessary changes.
??But make no mistake: The Chinese people will stand firm against U.S. bullying over trade. There is talk about China�s economy �sliding down� as a result of the trade war. Some expect China to succumb soon. I can tell you that this is wishful thinking.
??Yes, China is in the process of deleveraging, which is uncomfortable and painful. But it is a price worth paying for sustaining healthy development. It�s worth remembering that China adopted a stimulus program to help overcome the global recession triggered by the 2008 financial tsunami in the U.S. And it�s worth noting that the trade war may slow the necessary process of deleveraging.
??Finger-pointing and hurting each other won�t solve any problems. They will only make things worse. This is why China will continue to work with all countries, including the U.S., in areas of mutual concern � from climate change to transnational crime to epidemics to nuclear nonproliferation.
??This is also why China should continue talking to the U.S. Many in China believe that the root causes of U.S. troubles lie within � and therefore need to be solved by Americans themselves. We can see that the U.S. system requires a major overhaul to overcome deep sociopolitical divisions and economic disparities. But that doesn�t relieve China of the responsibility to engage in dialogue, to find out where the two sides can and can�t agree, and to seek solutions or at least ways to manage persistent disputes.
??Such an approach won�t appeal to those who seek confrontation now. But, to borrow a saying, if some folks want to chase butterflies, why should the rest of us go dancing along with them?
??China-U.S. relations have deteriorated faster than almost anyone could have expected. The question looms: Are the two countries leaping with their eyes closed into a so-called Thucydides Trap, with war possible between the rising and the established power? The U.S. is driving this process and should reflect carefully whether it�s in Americans� best interests to continue down this path. China also needs to consider how to address the challenges wisely and whether the slide in the wrong direction can be halted.
??Tensions caused by trade have started to spread to other areas. The U.S. is now claiming that China has become its main strategic competitor, even accusing it of interfering in elections and seeking to challenge American global hegemony. At the international level, globalism and multilateralism are under attack, and the resurgence of geopolitical and power competition, mixed with populism and protectionism, are weakening the bonds built among countries in recent decades. These uncertainties seem poised to drag the world back to the turbulent years of the early 20th century.
??The causes for these tensions are many and various. Competition among the new drivers of growth, industry and technology is a source of unease. So, too, are the seismic political realignments in liberal democracies. It also seems that the U.S. and other Western countries, driven by their suspicion of different political systems, have become more wary or even fearful of China�s success under the leadership of the Communist Party.
??The U.S. needs to realize that many of its complaints rest on shaky foundations. For instance, the U.S. seems to believe that it�s a victim of globalization � even though the numbers tell a different story. According to World Bank statistics based on current dollar estimates, U.S. gross domestic product grew from $5.98 trillion in 1990 to $19.39 trillion in 2017, an increase of $35,577 per capita. China�s GDP per capita over the same period grew $8,509, or less than a quarter of the U.S. total.
??The reality is that the U.S. has been the main long-term beneficiary of globalization. U.S. multinationals have earned huge profits. And there�s no doubt that Americans' prosperity and high living standards have been helped by low-cost overseas manufacturing, low-priced imports and the global circulation of dollars.
??Despite this, some in the U.S. seem to be hoping to �decouple� the world�s two biggest economies, to reduce their interdependence and hamper or at least delay China�s progress. The demands they�ve laid out are so extreme they seem designed to leave China no option but to choose confrontation and enter a high-cost power game.
??The truth is that China and the U.S. have grown together, in the same global economic system, for 40 years. The deep connections and complementary economic structures mean that decoupling is not immediately possible. If it has to happen, it would probably involve a protracted and painful process, and the extent of the damage to each country and its people�s well-being is hard to predict, as well as the damage to the world economy.
??Looking back at history, directional change is not made in a particular moment or through a single event but rather through the accumulation of many small adjustments to specific problems. The big picture only reveals itself later. In this light, the choices China and the U.S. make now will reverberate for a long time to come.
??If China and the U.S. work together, they can achieve major successes. Confrontation, by contrast, would be enormously harmful for both countries and the wider world. American and Chinese leaders cannot afford to make misjudgments on the fundamental issue of each other�s intentions, or we will all lose out in a fruitless downward spiral.
??That many of the charges the U.S. has leveled against China aren�t based on solid facts indicates there is lack of sufficient information about China and its aims and interests. Some of the accusations may be based on individual cases or mishaps, which are being deliberately used to give China a bad name. For example, if a Chinese individual or a member of the news media comments on American politics in a transparent and lawful manner, it should not be misportrayed as official interference. China has been highly sensitive about foreign interference in its domestic affairs and therefore condones no behavior for such purposes. Accusing China of interference without hard evidence, for any Chinese, is no more than a na?ve joke -- if not a deliberate demonization.
??For its part, the Chinese can do more to dispel such corrosive misconceptions. Chinese officials and scholars can be more active in engaging the American public. Take for example, the 2008 melamine-laced baby formula scandal. Peter Navarro, now a White House trade adviser, twisted the tragic episode in his book, using it to portray the Chinese as so immoral that they would poison foreign customers and themselves. Such distortions wouldn't spread if China had proactively given the world a fuller picture of the episode, making clear that the problem was investigated, that the people responsible were punished and that laws and regulations were put in place to prevent future such occurences. Ten years have passed and challenges remain, but food safety is a top priority of the Chinese government.
??Although China has a right to defend its sovereignty when its political system is under attack, it can also do a better job of responding to specific U.S. complaints. Take, for instance, the empty American contention that we haven't done enough to fight climate change. To safeguard the environment, China is paying a stiff economic cost. We have closed polluting factories, which has led to layoffs and workers in need of retraining. The difficulties China is going through in service to a healthier planet need to be shared with the entire world.
??Where there are reasonable requests from the U.S., the Chinese can candidly acknowledge and try to address them through accelerating reforms. For example, China has announced further steps to open up the financial service sector and bring down tariffs across the board. To better protect intellectual property, the Standing Committee of National People's Congress has just approved changes that the second-instance intellectual properties cases with strong technical elements will be submitted directly to our Supreme Court so as to unify the standards of adjudication.
??Since 2014, specialized intellectual property courts in Beijing, Shanghai and Guangzhou have handled a growing number of patent, trademark and copyright cases. Violations and disputes are not uncommon, however a strong emphasis is given to broadening people's awareness and reinforcing the execution of laws. If the U.S. cares for China's IP improvement, it should be China's partner in addressing the challenges.
??At this moment, it is important for the Chinese people to understand what is confronting us in our relationship with the U.S. and why. Although events of late have increased apprehensiveness, we have not given up the hope of returning to a place of progress and stability, and we are willing to work toward this goal. Just because the Thucydides Trap is set, doesn't mean we have to walk into it.

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