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U.S.-China growing pains

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By Fareed Zakaria
Monday, February 8, 2010

Despite the recent squall in U.S.-Chinese relations, both countries have powerful reasons to cooperate with one another. These have grown over the past two decades, a progression that both countries seem to recognize.

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China's reaction to the Obama administration's decision to sell arms to Taiwan has been furious but has mostly involved symbolic gestures. Compare this with 1992, when the first Bush administration sent Taipei weapons and soon afterward Beijing reportedly sold missiles to Pakistan and signed a nuclear-cooperation agreement with Iran.

This time China's strongest threat -- to "retaliate" against U.S. companies involved in arms sales -- is likely to be targeted at those firms, like Raytheon, that have been longtime suppliers to Taipei and as a consequence have written off the Chinese market. Beijing will likely not punish the three American giants involved in the deal: Boeing, General Electric and United Technologies.

Similarly, Beijing's indignant reaction to President Obama's decision to meet with the Dalai Lama is posturing. The Chinese government could not have been surprised. Every U.S. president in recent memory has met with the Dalai Lama, and Obama told China's President Hu Jintao directly that he was going to meet with the Tibetan leader.

On Washington's part, despite Hillary Clinton's criticisms of China over Internet freedom and President Obama's declaration that he will get tough with Beijing over its currency, it is unlikely that this strong rhetoric will be matched with equivalent actions. The United States has few arrows in its quiver, and the administration knows well that public admonition of Beijing rarely works. In fact, both countries might well be playing the same game: feigning public outrage to satisfy domestic audiences.

But there are two trends that could take a manageable situation and make it something more worrisome. The first is a growing perception in China that it is no longer as reliant on the West, and in particular the United States, as it was. In the 1980s, Deng Xiaoping brought China out of the cold by embracing America and opening up to foreign investment. This was different from the somewhat predatory, export-driven strategy of Japan and South Korea. But, the China scholar Minxin Pei argues, this was not an ideological conversion to free-market capitalism. Ravaged by the Cultural Revolution, Beijing desperately needed Western managerial know-how, technology and capital to develop its economy.

Today, China is awash in capital; it has many top-notch local companies; and this year for the first time, the primary engine of Chinese growth has been its domestic market, not exports. As China expands, that internal market will probably become its dominant concern.

A similar reality applies in foreign policy. Mao restored relations with the United States in some measure to buy himself an ally against the Soviet Union. China has needed the United States as a political ally ever since; Jiang Zemin's fuzzy embrace of the United States was part of a strategy whose goal was concrete: membership in the World Trade Organization. Today, China commands respect across the globe. It is confident, even cocky, in bilateral and multilateral fora.

None of this is nefarious. But Beijing's newfound arrogance is not joined with a broader vision. The country does not appear ready to play a global role. In international summits Beijing has been largely focused on pursuing its interests in a fairly narrow sense. At the April Group of 20 summit, for example, China participated actively on only one issue: to make sure that Hong Kong was kept off the list of offshore tax havens being investigated. Perhaps it's too soon to expect China to play a broader role, taking on responsibilities for global order and making concessions for broader interests. But given China's global impact, this is likely to produce paralysis on several fronts. American isolationism during the 1920s was understandable, too, but it had unhappy effects on the world.

The second factor that could exacerbate Sino-U.S. tensions is America's economic fate. There's great fear that the U.S. economy is in deep structural decline. If American politicians cannot muster the courage to make the U.S. economy competitive again and Beijing perceives that it is dealing with a superpower in inexorable decline, relations between China and America will change fundamentally. Of course, if that happens, America will have plenty else to worry about as well.

Fareed Zakaria is editor of Newsweek International. His e-mail address is comments@fareedzakaria.com.


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