Needed: A Consistent China Policy

by Leon Hadar

If you've been following the news in recent days, you might have concluded that China resides in two parallel universes. First, there is the geo-economic universe in which China, the rising economic power with a huge current account surplus, is being urged by members of the Group of Seven (G-7) leading industrialized nations (whose finance officials met in Washington two weeks ago) to adopt more flexible exchange rates.

Then there is the geo-strategic universe in which China, the emerging Asian military power, is targeted by the U.S. as a potential strategic competitor and viewed by many Japanese as a future threat to core national interests, a perception that has been accentuated by the recent anti-Japanese demonstrations in China.

And, indeed, one sometimes gets the impression that whether it's in Washington,Tokyo, or Brussels, policymakers seem to believe that there is no linkage whatsoever between what is happening in their relationship with China on the geopolitical front and the developments that are taking place in the geo-economic arena.

The conventional wisdom assumes that the U.S. and other nations can trade with and invest in China and deal with the policy repercussions of those economic exchanges – that help transform China into a global political power – without considering their impact on their diplomatic and military ties with Beijing.

Even more amazing is the way American officials tend to de-link certain policy issues even when they operate in these parallel geo-strategic and geo-economic universes. Hence, the Americans expect the Chinese to go out of their way to press their ally Pyongyang to rejoin the five-party talks on the North Korean nuclear crisis, while at the same time they try to project a tough American posture on Taiwan, even encouraging Japan to form a common front with the U.S. over the issue.

But as U.S. policymakers concluded during the Cold War as they managed their relationship with the former Soviet Union, you cannot avoid employing a policy linkage when you are dealing with other powers. It didn't make sense then to de-link U.S. nuclear arms negotiations with Moscow from the issue of Soviet expansionist policies in the Third World. In fact, such linkages permitted the Americans to deal more effectively with the Soviets and provided opportunities for "package deals."

Opening U.S. markets to exports from Japan and East Asia was part of a strategy to strengthen the economies of America's anti-Communist allies in the Pacific. Even agreements by America's economic partners to stabilize the U.S. dollar or the price of oil were very much part of the Western strategy to assert power vis-à-vis the Soviets and their allies.

In a way, what seems to be missing from the diplomatic and economic policies toward China that have been pursued by the U.S. and its partners is a coherent vision of their national and common interests. The result is a mishmash of policy attitudes toward the Chinese that don't make a lot of sense if you take a look at the broad picture: China as a place where American companies can make a lot of money. China as a threat to the American economy. China as a threat to American interests in Asia. China as a partner of the U.S. in resolving the North Korean crisis. And the list of inconsistent policy tracks goes on and on.

So what is needed now more than ever is a clear U.S. policy that articulates Washington's view of China's rise as an economic and political-military power. This would provide a set of consistent policies that could also serve as a focus for a discussion of U.S. allies in East Asia and Europe. That in turn will create an environment where policy linkages and "package deals" with China can be agreed on.

Washington shouldn't allow its somewhat confusing positions on Taiwan and North Korea to determine its policies toward China. Its approach toward China should create the basis for its policies toward those two regional problems and produce opportunities for bilateral and multilateral package deals.

If the U.S. and other leading economic powers want China to respond to their concerns, they should treat it like a leading economic power and invite it to join the G-7/8 club ASAP.

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