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President Xi Jinping has dealt with the United States for almost three years as relations have declined. His bold and assertive actions in areas sensitive to US interests departed sharply from past restraint and put an aroused America on guard. It is hard to give these results a passing grade. As they did in Washington on September 24-25, the two leaders continue to meet and achieve agreements in limited areas of mutual interest, but rising American debate over China policy is fed by Xi’s repeated affronts and seemingly cavalier treatment of US concerns. Americans seek means to get Xi Jinping’s China to stop taking actions seen as offensive in the East and South China Seas, in cyber economic espionage, in state-backed intervention in currency and Chinese domestic markets that disadvantage US companies; in using China’s large foreign exchange reserves and other means to support self-serving Chinese-backed development institutions at odds with those backed by America; in continued rapid development of military forces aimed at Americans; and in stronger repression of Chinese peoples’ political freedom and related human rights.

Xi Jinping continues to see advantage in undermining American interests in these areas. This plays well with domestic audiences in China. Approaching the end of his term and reluctant to apply American power in foreign affairs, President Barack Obama complains but seems passive and weak in dealing with Chinese challenges. Current trends forecast trouble ahead with hardening American attitudes running up against self-absorbed and self-righteous Chinese assertiveness.

Current Troubles in Perspective

Veteran observers of Sino-US relations would likely argue for some grading leniency for Xi as his assignment is difficult; Chinese and American leaders long have had difficulty managing differences while trying to advance common ground. President Richard Nixon and Chairman Mao Zedong set strategic understanding between the two powers focused on an expanding Soviet Union. US-China relations were often troubled, but common concern with the USSR kept disputes in check. The end of the Cold War coincided with the Tiananmen crackdown and the end of the Soviet Union. These developments shattered the foundation of Sino-American cooperation.

Subsequently, officials and prominent experts in the United States and China at different times argued in favor of new overall frameworks for the relationship that would allow the two powers to cooperate more closely and manage their differences more effectively. These frameworks failed. The Clinton administration sought a strategic partnership with China that was abandoned by the Bush administration, whose later appeal to China to become a “responsible stakeholder” in international affairs met an unfavorable response. Calls within the Obama administration to establish a closer “G-2” relationship with China prompted another unfavorable response, reverberating in the US side’s rejection of this notion too. Most recently, Xi Jinping’s framework to establish a “new type of major power relations” with the United States is failing as Americans increasingly distrust what they perceive as a double game of encouraging high-level bilateral discourse while undermining American interests in key regional, economic, and political areas.¹

These failures come from strong and enduring Sino-American differences, which are deeply rooted in both countries’ views of their history, interests, and values. Heading the list for China is opposition to US international leadership, explicitly favoring a multipolar world; Beijing opposes US support for Taiwan and others who disagree with China, and it guards against alleged US schemes to undermine the Chinese one-party political system. Beijing also works against the United States in Asia, endeavoring to weaken the alliances and strong security presence along China’s periphery, which is seen as a strategic threat to the country. The American differences with China focus on US determination to sustain global and regional leadership; China’s sovereignty and security ambitions as well as its employment of coercive means against neighbors, many of which are allies or close partners of the United States; China’s state-directed economic manipulations that result in substantial US economic losses; and China’s negative human rights record.

The state-fostered Chinese elite and public view of foreign affairs highlights a particularly negative perspective of the United States. China’s strong self-righteous exceptionalism in foreign affairs will not change easily. The United States also is known for exceptionalism in international affairs. And both countries are big—the world’s most powerful; their approaches to each other will not be easily changed by smaller powers or other outside forces.²

Under these circumstances, aspirations for major breakthrough in relations seem unrealistic. Practice shows wisdom in seeking more modest expectations based on pragmatism influencing both sides. Such behavior emerged at the start of the twenty-first century after a decade of repeated turmoil and periodic dangerous confrontation. China at this time broadened efforts to reassure neighbors that its rise was not a threat. Officials put aside strident criticism of the United States in favor of a focused effort to reassure it. They said that the alternative risked the United States and other concerned powers working together to resist China’s rise, noting that such experience of rising powers in the twentieth century had led to their destruction. On the US side, the initial toughness of the George W. Bush administration subsided beginning with the September 11, 2001, terrorist attack on America. As the United States became preoccupied with conflicts in Afghanistan and Iraq, constructive interaction with China became more important.

There followed several years of generally cooperative relations. The two sides dealt with differences in a burgeoning array of official dialogues and addressed such sensitive issues as North Korea’s nuclear weapons program and Taiwan’s moves toward independence from China. The Obama government strove to preserve the overall positive momentum in US-Chinese relations seen in the latter Bush years.³

The pragmatic cooperation in this decade was based on circumstances.

Both administrations benefitted from positive engagement in various areas. It supported stability in the Asia-Pacific, a peaceful Korean Peninsula, and peace in the Taiwan Strait. US and Chinese leaders also cooperated in varying degrees to foster global peace and prosperity and to deal with climate change, terrorism, and nonproliferation.

Both administrations saw that the two powers had become so interdependent that emphasizing the negatives in their relationship would hurt the other side but also would hurt them. Such interdependence was particularly strong in Sino-American economic relations.

Both leaderships were preoccupied with a long list of urgent domestic and foreign priorities; in this situation, one of the last things they sought was a serious confrontation in relations with one another.

From the end of 2009 to the end of 2010, Sino-US relations were troubled, notably by security issues with differences over North Korea in the forefront. Yet, by early 2011, the two sides were again focusing on common interests on the Korean Peninsula, keeping alive hopes that no fundamental change had occurred from the prior cooperative mood. Relations deteriorated over economic disputes during the US presidential campaign in 2012. China became more assertive in support of its interests at odds with the United States, notably claims to disputed territory in the East and South China Seas. The Obama government focused on a new approach known as the “rebalance” in the broad Asia-Pacific region that had military, economic, and diplomatic dimensions at odds with Chinese interests. Relations became more overtly competitive.⁴ Nevertheless, given its many preoccupations at home and abroad, the Obama government seemed disinclined for the rest of its term to depart from the path of pragmatic engagement with China. It was up to Xi Jinping to determine whether or not relations would deteriorate further.

Xi Jinping’s New Priorities and Impact on America

Unfortunately, Xi’s record shows repeated choices that place other foreign and domestic priorities above his avowed but increasingly hollow claims to seek a positive relationship with the United States. These actions make it increasingly clear that in Xi’s view, positive US ties will come on condition of America avoiding opposition to new priorities in Chinese foreign relations under him.⁵ By putting the United States “on notice” that it is the United States that has to give way to China’s practices at odds with US interests, the Xi government has prompted Obama and his government to be much more vocal in issuing often strident complaints. Xi has ignored them, leaving it to underlings to rebuff them. The frustration within and outside the US government grows in the face of Xi’s actions; there has been a toughening of behavior in some areas. A significant debate has emerged inside and outside the government with those favoring a tougher policy toward China in the ascendance.⁶

Xi Jinping began the process of changing Chinese policies with major implications for the United States as he prepared to take control of the Communist Party of China (CCP) and state power in late 2012. The caution and low profile of the previous leaders were viewed with disfavor. Chinese policies and practices became much more assertive. Xi received enormous publicity from Chinese propaganda and media outlets; his image as a decisive leader prepared to act strongly in the face of American and other criticism was welcomed by Chinese public opinion and elite opinion. Chinese reassurance and restraint in dealing with the United States and others were played down; officials in China said they had conveyed Chinese weakness to Asian rivals and the United States. The string of Chinese actions and initiatives shook many out of their complacency:⁷

The government orchestrated the largest mass demonstration against a foreign target ever seen in Chinese history (against Japan over disputed islands in September 2012). It followed with intense political, economic, and security pressure on Japan unseen since World War II.

China used coercive and intimidating means to extend control of disputed territory at neighbors’ expense. Chinese officials dismissed and rebuffed US and other complaints that their actions upset regional stability.

Despite increasing US complaints, the new Chinese government continued manipulative economic practices, cyber theft, and reluctance to contribute regional and global common goods.

China used its large foreign exchange reserves and trading capacity to develop international banks and to support often grandiose Chinese plans for Asian and global investments, loans, and trade areas that excluded the United States and countered American initiatives and support for existing international economic institutions.

Xi Jinping tightened political control domestically in ways grossly offensive to American representatives seeking political liberalization and better human rights conditions in China.

The Chinese advances were supported by ever expanding Chinese capabilities backed by the impressive and growing economic and military power of China. The Chinese military capabilities were arrayed against and focused on the American forces in the Asia-Pacific region.

Official Chinese media highlighted Xi’s leadership; he was depicted in glowing accounts directing multifaceted Chinese initiatives abroad with confidence and authority in pursuit of his broad vision of a unified, powerful, and internationally respected China—what Xi and the Chinese publicists called the “China Dream.” Complaints by neighbors, the United States, and other powers concerned with the negative impacts of Xi’s actions were rebuked or scorned.

Power-Shift in Asia and Future US-China Relations

Xi’s assertive ascendance supported the recently common view among Chinese and international commentators that China had grown in power and confidence to the extent that a tipping point had arrived in the Asian order with the United States in decline and China in greater control. The choices for America were often depicted in stark terms. The United States was called on by some to gird itself to prepare to resist in a “contest for supremacy” with China. Others saw the need for America to give way, accepting China’s leading power and influence in Asia as America pulled away.⁹ The current American debate over what to do about the Xi Jinping government’s actions contrary to American interests indeed contains variations of both of the above perspectives. Some who long viewed China’s rise with suspicion judged that these Xi actions validated their calls for much stronger US military and other preparations to confront China. And those American specialists giving high priority to maintaining cooperative relations with China argued for accommodation with the United States trying to meet China’s growing demands.¹⁰
These choices seem extreme and are unattractive to many Americans. They involve risk of great power war on the one hand or American appeasement on the other.

Fortunately, the current debate over China policy has led to an increasingly sophisticated view of the power realities in China and the United States, the extent of their mutual interdependence, and their respective influences in the all important Asia-Pacific region. Such realities—reviewed below—undermine forecasts of a power shift with US leadership being replaced by a dominant China. The realities of power and influence continue to constrain Chinese policy actions.¹¹

Despite its reputed resolve and frequent bluster, Xi Jinping’s government cannot risk a serious confrontation with America. Indeed, China has experienced along with the downturn in US relations, a serious worsening under Xi in Chinese relations with key neighbors and concurrent instability in nearby Asia—by far the most important arena in its foreign relations. The regional setbacks are not offset by Xi’s ambitious economic investment and financing plans, which have increasingly obvious weaknesses of their own. By contrast, the US government’s growing enmeshment in Asian security, economic, and diplomatic affairs has been strongly facilitated by China’s domineering postures. The overall situation provides a good foundation for effective actions carried out by a resolute US administration to deter Chinese expansionism by underlining to the Xi government the negative consequences if China continues assertive and disruptive actions in self-absorbed pursuit of the “China Dream.”

Constrained China

Constraints on the Chinese challenges to American leadership involve domestic preoccupations, strong Chinese interdependence with the United States, and China’s continued weak position relative to the United States in Asia and the world.¹²

Domestic preoccupations¹³

There is a general consensus among specialists in China and abroad about some of the key domestic concerns preoccupying the Xi Jinping leadership:

weak leadership legitimacy highly dependent on how the leader’s performance is seen at any given time;

pervasive corruption viewed as sapping public support and undermining administrative efficiency;

widening income gaps posing challenges to the communist regime ostensibly dedicated to advancing the disadvantaged;

incidents of social turmoil reportedly involving 100,000-200,000 mass events annually that are usually directed at state policies; budget outlays for domestic security are greater than China’s impressive national defense budget;¹⁴

a highly resource-intensive economy (e.g., China uses four times the amount of oil to advance its economic growth to a certain level than does the United States, even though the United States is inefficient and wasteful in how it uses oil);¹⁵ enormous and rapidly growing environmental damage is being done in China as a result of such intensive resource use; and

the need for major reform of an economic model in use in China for over three decades, which is widely seen to have reached a point of diminishing returns.

That China’s leadership remains uncertain and fractious in how to deal with these issues was underlined by the resort to state-intervention (notably at odds with the announced economic reforms) to try to limit the damage from the recent stock market sell off and the negative consequences for Chinese trade resulting from the upward valuation of the Chinese currency. Reports of the results of the leaders’ annual retreat at the seaside resort Beidaihe in August said that Xi’s reform efforts were encountering extraordinarily “fierce resistance.”¹⁶ How much these domestic priorities preoccupy Chinese leaders and affect their policy toward America is not known but on balance they seem to incline Chinese leaders to avoid big problems with the United States.

Strong interdependence

The second set of constraints on tough Chinese measures against the United States involves strong, ever-growing interdependence in relations. Beginning at the turn of the century, each government used engagement to build positive and cooperative ties and interdependence and webs of relationships that had the effect of constraining the other power from taking actions that opposed its interests. While the analogy is not precise, the policies of engagement pursued by the United States and China toward one another featured respective “Gulliver strategies” that were designed to tie down the aggressive, assertive, and other negative policy tendencies of the other power through webs of interdependence in bilateral and multilateral relationships.¹⁷

The power of interdependence to constrain assertive and disruptive actions has limits. Nevertheless, China’s uncertain domestic situation seems unprepared to absorb the shock of an abrupt shut down of normal economic interaction that might result from a confrontation with America. And both sides have become increasingly aware of how their respective interests are tied to the well-being and success of the other; thereby limiting the tendency of the past to apply pressure on one another.

China’s insecure position and recent decline in the Asia-Pacific

The third set of constraints on tough Chinese measures against the United States involves China’s insecure position in the Asia-Pacific region. Even after over two decades of repeated efforts, China’s rise in the region remains encumbered and has a long way to go to challenge US regional leadership. The Xi government’s assertive policies towards its neighbors have made the situation worse. Without a secure foundation in nearby Asia, China will be inclined to avoid serious confrontation with the United States.¹⁸

Chinese strengths in the Asia-Pacific region include:

China’s position as the leading trading partner with most neighboring countries, heavy investment of those countries in China, and recent growth of Chinese investment in nearby Asia;

China’s growing road, rail, river, electric power, pipeline, and other linkages with nearby countries;

China’s prominent leadership attention and active diplomacy in interaction with neighboring countries both bilaterally and multilaterally; and

China’s expanding military capabilities and related civilian security capabilities.

Nevertheless, these strengths are offset by various weaknesses and limitations:

The Xi government’s policies for two years drove relations with Japan to their lowest point since WWII. Japan’s effective firmness backed with stronger support from an increasingly concerned America saw Xi change course—predictably without acknowledging any failure of past policy—in seeking less acrimonious, albeit still negative, relations with Japan in 2015.

Xi’s policies drove relations with North Korea to their lowest point ever; more than ever China appears unable to secure its interests in this critically important area.

Most Southeast Asian nations did not challenge China publicly over the South China Sea, but Chinese expansion put the United States on alert; it prepared militarily with Japan, Australia, and key Southeast Asian governments.

The Xi government’s mix of economic and political overtures with military force demonstrations drove New Delhi to advance ties with the United States, Japan, and Australia to protect against China.

Additionally, Taiwan and Hong Kong experienced unanticipated mass demonstrations and political developments sharply at odds with Chinese interests; in neither case did Xi’s China show a smooth path for advancing Chinese influence and control. A major test looms with the expected election of the Democratic Progressive Party (DPP) candidate in the January 2016 presidential elections. The DPP has opposed many aspects of the recent Taiwan’s government’s reassurance of and closer relationship with China. The Xi Jinping government had an easier time improving relations with various Silk Road and other initiatives in Central Asia and with Russia now isolated from the West. But overall it was clear that China’s position in nearby Asia declined markedly due to Xi’s overreaching assertiveness.

Xi’s Flawed Economic Outreach ¹⁹

The Xi Jinping government emphasizes massive plans for Chinese investment and financing abroad. The initiatives modify strong “going out” policies of Chinese investment and financing during the previous decade. The latter saw Chinese built infrastructure to access needed raw materials. The new investment and financing push enables construction abroad of Chinese supplied infrastructure by the enormous excess capacity of Chinese companies made idle inside China because of recent economic reforms.

Chinese commentary portrays enormous Chinese largess, unprecedented in the annals of world affairs. The results are multi-billion dollar commitments to various Chinese Silk Road funds, new development banks led by China and regional initiatives in Africa and Latin America. China pledged infrastructure in unstable Pakistan is valued at USD 46 billion; a responsible Chinese official said Beijing’s overall plan for investment and financing in Africa over the next decade amounts to USD 1 trillion; and Xi personally pledged investment in Latin America of USD 250 billion over the next decade. Foreign commentary often echoed Chinese assessments in seeing Beijing as the dominant leader of international economic relations in Asia and much of the developing world.²⁰

In contrast, a closer look shows the trade and economic influence of Xi Jinping’s China full of gaps and with less impact than might be expected. China’s trade is over 20 percent of the trade with South Korea and Australia, but neither country is subject to Chinese dominance. China’s important but lower percentage of trade in developing countries in Asia as well as in Africa and Latin America usually makes China just one among several important foreign actors in these countries. China’s role as an investor in all these regions is surprisingly small, especially in view of all the attention Chinese leaders have given for over a decade to plans for multi-billion dollar investments. China accounts for about 10 percent of the foreign investment in Southeast Asia and about 5 percent in both Africa and Latin America.²¹

A major weakness of the Xi government’s pledges of large sums of investment and loans is that China often implements only a fraction of its very ambitious pledges. Promises of large investments and loans to Pakistan and Indonesia this year came with reports that China had actually implemented less than 10 percent of the multi-billion dollar pledges made to each country over the previous decade. Recent practice showed multi-billion dollar Chinese projects stopped, put on hold or abandoned in numerous countries, notably Afghanistan, Brazil, Greece, Mexico, Myanmar, Nigeria, the Philippines, Sri Lanka and throughout the turbulent Middle East and North African region. A responsible Chinese official averred that 80 percent of proposed Chinese mining deals (an important feature of economic interaction in developing countries) fail to be implemented; another Chinese specialist advised that Chinese overseas investment ventures more often than not were losing money. Chinese influence also declines with negative reactions to corrupt practices and non-transparent agreements with unaccountable foreign governments and with those many developing countries facing demands for repayment of large Chinese loans from Chinese government creditors determined to be paid back.²²

Aroused America

Xi Jinping’s outwardly dismissive treatment of US complaints adds to his image in China as a decisive and forceful leader. But it reinforces American suspicion and strengthens resolve to counter Chinese advances. It is no coincidence that China’s influence in Japan, Taiwan, the South China Sea, Australia, and India has declined as the United States has enhanced ties with countries along China’s rim concerned with Xi’s assertiveness. Overall, the Obama government’s rebalance policy and recent American practice mesh well with the interests of the majority of Asia-Pacific governments. By contrast, China’s mix of demands and self-serving and repeatedly unimplemented economic initiatives often has more negatives than positives for Asia-Pacific governments.²³

US weaknesses in the Asia-Pacific included the foreign policies of the George W. Bush administration, which were very unpopular with regional elites and public opinion. The Barack Obama government refocused US attention positively on the Asia-Pacific region; regional concerns shifted to worry that US budget difficulties and political gridlock would undermine support for regional responsibilities. Thus far, the rebalance policy is being implemented in ways that ease these concerns and reinforce US strengths.

Security

In most of Asia, governments are strong and make the decisions that determine the direction of foreign affairs. In general, their legitimacy and success rests on nation building and economic development, which require a stable and secure international environment. Unfortunately, Asia is not particularly stable, and most regional governments are privately wary of and tend not to trust each other. As a result, they look to the United States to provide the security they need, recognizing that this security role is very expensive and involves great risk, including large-scale casualties if necessary. They also recognize that neither China nor any other Asian power or coalition of powers is able or willing to undertake even a fraction of these risks, costs, and responsibilities.

Economics

The nation-building priority of most Asian governments depends importantly on export-oriented growth. Much of Chinese and Asian trade heavily depends on exports to developed countries, notably the United States. The United States runs a massive trade deficit with China, and a total annual trade deficit with Asia valued at over USD 400 billion. Asian government officials recognize that China, which runs an overall trade surplus, and other trading partners of Asia are unwilling and unable to bear even a fraction of the cost of such large trade deficits, which, nonetheless, are very important for their governments.

Government engagement

The Obama government’s emphasis on consultations with regional stakeholders has been broadly welcomed and stands in contrast with China’s increasing demands in Asia. The Pacific Command leads US security organizations in wide-ranging and growing webs of intelligence and security relationships throughout the region that China, adverse to the costs of alliances and lasting foreign commitments, is only beginning to consider.

Nongovernment engagement and immigration

The United States, reaching back to past centuries, has engaged the Asia-Pacific through business, religious, educational, media, foundation, and other generally positive interchange. This active interaction puts the United States in a unique position and reinforces its overall influence.²⁴ Meanwhile, fifty years of generally color-blind immigration policy since the ending of discriminatory US restrictions on Asian immigration in 1965 has resulted in the influx of millions of Asia-Pacific migrants, who call America home and who interact with their countries of origin in ways that undergird the American position in the region.

Asia-Pacific contingency planning

Part of the reason for the success of US efforts to build webs of security-related and other relationships with Asia-Pacific countries has to do with active contingency planning by many Asia-Pacific governments. Given recent Chinese demands, coercion and intimidation, the Asia-Pacific governments’ interest in such ties with the United States has increased.

How Much Trouble Ahead?

The September 2015 Washington summit has changed little in the underlying dynamics determining the recent decline in China-US relations. Circumstances enable Xi Jinping’s recent policy choices undermining American interests. Thus, we should expect China to militarize the newly created islands in the South China Sea and use them to seek dominant control in this sensitive area. We should anticipate Beijing taking other bold steps forward in asserting economic power at American expense, as it has done with the Asian Infrastructure Investment Bank and with massive promises of investment and development assistance abroad. The arrows in China’s quiver will include initiatives unexpected by foreign observers. Such activism and boldness are well received by audiences in China.

Among the circumstances allowing Chinese assertiveness is that Obama seems weak and too preoccupied with other issues to take more resolute actions designed to get China to stop actions deemed offensive. Perhaps, the US government’s extraordinary publicly displayed diplomatic efforts to pressure the Chinese on cyber security will result in meaningful changes, and perhaps they will not if the Chinese judge that the United States still remains reluctant to employ power against China on such sensitive matters.

The American government’s reluctance to use the advantages the United States holds in Asia and other means to curb Chinese expansion and advances at US expense is understandable given the trauma America has gone through because of massive unsuccessful assertions of military power in Iraq and Afghanistan. This reluctance will not change soon; Xi Jinping and his government presumably calculate their actions accordingly as they work incrementally and steadily against American interests in a wide range of areas where China differs strongly with the United States.²⁵

Many American leaders and specialists inside and outside the government have a number of proposals for action.²⁶ The realities of power in Asia and China’s continued reluctance to confront powerful America would support a tougher American stance against China’s advances. Depending on who wins the 2016 election, some of the proposals for action will be adopted. How much US attention is devoted to China will depend heavily on how China continues the offensive actions. At present, the China debate is only one of several important foreign policy issues in the US election campaign that focus on perceived US weaknesses in dealing with an array of international challenges.

One obvious outcome of recent developments is that few Americans will anymore believe Xi’s pledges for a “new relationship” with the United States. Those rhetorical calls increasingly ring hollow in the face of China’s actions against important American interests; they show Xi to be duplicitous, playing a “double game” of promising good relations while moving full speed ahead with policies that undermine America.²⁷ As a future US government prepares to deal with Xi’s advances, it will likely view the Chinese leader as less trustworthy and predictable than earlier Chinese leaders.