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Peter W. Rodman

The Nixon Center, Washington, DC

1998

Table of Contents

I. "In Our Own Hands": China's Foreign Policy

    Easing Tensions
    Main Themes

II. Asymmetry and Deterrence: China's Military Policy

    Pattern of Procurement
    Military Doctrine
    Revolution in Military Affairs
    Conclusions

III. Limits to Growth: China's Economic Prospects

    China and the Asian Crisis
    Reform and Retrenchment
    Trade Issues
    Five Percent Growth?

IV. Losing the Mandate of Heaven: China's Internal Vulnerability

    Mao's Legacy
    Signs of Change
    Political Ferment
    The "Inevitability Cop-Out"?

V. Issues for U.S. Policy

    The Military Dimension
    The Regional Equilibrium
    Taiwan
    Human Rights
    Hong Kong and Tibet
    American Strategy

Executive Summary

Tensions between the U.S. and China persist over human rights, Taiwan, proliferation, and now the technology-transfer scandal. But the deeper causes of tension are structural: The Soviet threat that bound us together -- and used to dampen such disputes -- is gone. Tiananmen shattered the U.S. domestic constituency in support of the relationship, and simultaneously led Chinese leaders to fear that Western democratic ideals were a significant threat. Meanwhile, China is emerging as a potential superpower in its own right.

China and America today, are suspended somewhere between friendship and rivalry.

China's foreign policy today is designed to reassure its neighbors and the U.S. after crises in 1995-96 in which China flexed its military muscles. Is this reassurance a strategic change, or only tactical? China stresses its "independent" foreign policy and champions global "multipolarity," which means building counterweights to American dominance. U.S. and Chinese strategic interests, which once were parallel around the world, now are the subject of disputes -- Iran, Iraq, proliferation, etc. Some Chinese strategists view the U.S. as "the opponent." Washington and Beijing are laboring to find common ground on issues such as Korea, Pakistan, and regional stability amid the Asian economic crisis. A revived sense of parallel geopolitical interests would do much to slow down or reverse the drift toward strategic rivalry.

China's military buildup is also troublesome. It starts from a low base, and China is nowhere near matching American capabilities. Yet much of China's procurement (such as modern anti-ship missiles, torpedoes, and jet fighters purchased from Russia) is aimed at projecting power in the region around its periphery -- where up to now the U.S. has enjoyed a monopoly of power and where reside millions of people whom the U.S. is committed to protect. Regardless of Chinese intentions, this is inevitably a strategic problem for us. China's new weaponry will be sufficient in the near term to raise the risks and inhibitions to an American President who contemplates intervening in a future crisis in the Taiwan Strait or South China Sea. China is also doing serious R&D into high-tech "information warfare." While it cannot hope to equal the U.S., China is zeroing in on American vulnerabilities -- studying, for example, how to launch "crippling attacks" on an opponent's computers.

China's economic prospects, however, are now more complicated than previously thought. China's is already the world's second-largest economy, and its market reforms promise a successful future. Yet internal microeconomic weaknesses (including a near-bankrupt banking system) -- compounded by the Asian financial crisis -- may produce an abrupt slowdown this year. (Some analysts predict 5% growth in contrast to the 10% of recent years.) Unemployment is already high. This will magnify the social pain of much-needed reforms, such as dismantling state-owned enterprises.

The economic slowdown will also play into China's most serious problem, which is its internal political vulnerability. Political ferment, in the form of officials and intellectuals calling for democratization, is building in 1998, probably beyond the intentions of the reformist leadership of Zhu Rongji. The possibility of miscalculation or political crisis is growing.

Thus, the paradox of a China that is difficult internationally yet vulnerable internally. The priorities of U.S. policy seem to be skewed. Our debate focuses on the repressiveness of China's internal system -- which in fact seems quite fragile. Yet, the strategic challenge that China poses seems to be neglected by both the Administration and Congress, as the U.S. defense budget shrinks. The U.S. must maintain its military primacy in the Asia/Pacific region and its alliances and commitments. Technology transfer that accelerates China's military modernization is not in the U.S. interest. Defense against ballistic missiles should be a major element of the defense posture of the U.S. and its allies and friends. Probably only marginal improvements are possible in human rights so long as the regime exists in its current form. Taiwan is the issue with the greatest potential to trigger a U.S.-China crisis, but the U.S. should avoid the temptation to mediate.

The Asia/Pacific region is rife with rivalries and mutual suspicions among China, Japan, India, Russia, and others. The U.S. is in a pivotal position as the one power that all others seek a relationship with as reinsurance against their neighbors. This is our great advantage. We need to be prepared to confront China should it challenge the regional balance of power. But, short of that, we preserve our advantage by preserving our options toward all the regional powers -- including China.

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