An Emerging China
In a World of Interdependence

This report charts a course for the Trilateral countries (Japan, North America, and Western Europe) in dealing with China. It considers China’s rise more an opportunity than a threat, and recommends a wide range of economic, strategic, and political actions that would facilitate China’s involvement in the world community. At the same time, it recommends that expectations be kept realistic.

The Trilateral countries have a substantial number of significant interests at stake with China. Most of these interests correspond with the interests of China’s leaders to develop their country in a tranquil environment. The priorities recommended in this report are in the security and economic domains and in assisting development of institutions contributing to China’s effective and good governance.

Text of Introductory Chapter

Over the past century, the rise of new powers has posed great challenges and opportunities for the established world order. Thus, the rise of the United States, Germany, and Japan in the late 1800s and early 1900s necessitated massive adjustments to the international system led by Britain and France. The rise of the Soviet Union disrupted the aspirations for a harmonious post-World War II order led by the United States. The postwar rise of Japan and the European Community strained international monetary and trading arrangements (and encouraged creation of the Trilateral Commission, among other responses).

Now, the world—and particularly the Trilateral countries—faces the prospect of a new rapidly rising power: China. Its rise is propelled by its robust economic performance. With considerable unevenness and starting from a low base, its economy has been expanding at an average annual rate of 7-8 percent for nearly 40 years; and in the past ten years the pace has dramatically accelerated. The increased economic weight of China is most sharply portrayed using purchasing-power-parity (PPP) exchange rates, as in the as revised weights for its World Economic Outlook.1 Using the traditional measure oficurtent exchange rates, the Chinese economy’s share in the world economy hardly changed from 1970 to 1990, hovering around 2 percent (the smallest of the G-7 economics, Canada, was at 2.58 percent on this scale in 1990). Using a PPP-based measure, the weight of the Chinese economy rose from somewhat under 3 percent in 1970 to over 6 percent in 1990—not far behind Japan at 7.63 percent and well above all other G-7 economics except the United States. While most of China’s 1.2 billion people still rank among the lower third or half of the world’s population in terms of per capita income and consumption, the People’s Republic of China is reaching the top ranks of many indicators of aggregate economic size. China is now among the ten largest exporting countries. Energy consumption in China is exceeded only by the United States.

China’s rise offers the Trilateral countries not only major economic opportunities, but basic political and security opportunities as well. Twenty years ago, many people believed that North-South tension—the rivalries between the developed and developing countries—would be the major source of global instability in the 21st century. These people believed that Cold War tensions between the Soviet bloc and the Trilateral countries would eventually be surmounted (though few predicted the collapse of the Soviet Union). They believed North-South tensions were more enduring, pervasive, and unremediable. The development of China is removing a substantial portion of humankind from the ranks of the poor, further blurring the distinction between developed and developing countries. The challenges which China’s rise presents are far more welcome than the problems that would have existed if China had remained unambiguously among the ranks of the poor and underdeveloped.

A sense of realism is necessary, however, to grasp the opportunities and challenges that China’s rise presents. Four factors particularly merit attention:

First, China’s trajectory to date suggests it will emerge as a complete power. That is, as its officials acknowledge, its leaders wish their nation to be wealthy and powerful. In contrast to the Soviet Union, which had military power without economic strength, or Japan, which is economically powerful but militarily constrained, China is likely to emerge as a “comprehensive power,” with both economic and military strength. Its accrual of power will be protracted, but no one should doubt the determination of China’s leaders either today or in the future—to have a prominent and respected voice in shaping the world’s and their region's destiny, and to acquire the weaponry that they believe will give added credibility to their voice.

Second, China’s rise coincides with the globalization of manufacturing processes, the telecommunications transformation, and the internationalization of financial markets. The possibility exists of weaving China into an interdependent world at a relatively early stage in its rise, thereby increasing its stake in a stable world order. It is also a matter of urgency to involve China in addressing a range of issues that endanger the welfare of all humankind, such as global climatic change, environmental degradation, loss of bio-diversity, dissemination of weapons of mass destruction, and historically unprecedented increases in population. No adequate response to these issues is conceivable without China’s active cooperation.

Third, China challenges traditional concepts about rising powers. In the past, nsing states have controlled their boundaries, had minimal social unrest, and had settled institutional arrangements. China’s rise, however, is occurring under conditions of uncertainty. Many fundamental constitutional issues confront the Chinese polity: the distribution of authority between the center and the provinces, civil-military arrangements, the procedures for orderly succession and transfer of power from one ruler to the next, the role of the ruling Communist Party, and the role of representative assemblies and parliaments. Further, the mainland government, although recognized by most countries as the legitimate government of China, is not the only entity of Chinese ethnicity. Three ethnic Chinese entities—Taiwan, Hong Kong, and mainland China—form an increasingly intertwined economic zone. Similar trans-state economic zones are linking portions of China with Thailand and Burma in the southwest, with the Central Asian republics in the northwest, and with Russia, North and South Korea, and Japan in the northeast. Even as mainland China rises, its control over the flow of goods, ideas, and people across its border is eroding. Hence, China in the years ahead is likely to be territorially amorphous, economically dynamic, culturally proud, socially unstable, and politically unsettled. These qualities have not co-existed in previous rising powers, and they will require a distinctive set of responses.

Fourth, China’s rise is occurring while the energies of the established powers are consumed by domestic political and economic concerns and while their leaders are particularly weak. To the extent the Trilateral countries attach priority to foreign affairs, their attention is focused elsewhere. The attention that China receives tends to be sporadic, and the signals emitted tend to be inconsistent. High-level dialogue with China’s leaders cultivated in the 1970s—by persons such as Henry Kissinger, Zbigniew Brzezinski, Edward Heath, Franz-Josef Strauss, and several Japanese—was not sustained in the 1980s. Opportunities have been neglected to share and shape perspectives on the nature of the post-Cold War era and to nurture the sense of responsibility that should accompany great-power status. As a result, China’s cooperation must be elicited on headline-grabbing transitory issues—such as the Iraqi invasion of Kuwait, North Korea’s acquisifion of nuclear weapons, or Beijing’s treatment of specific dissidents—without a shared conceptual framework having been established to illuminate for the Chinese why it is in their interest to resolve the problem at hand. The established powers therefore find themselves as the demandeur of the rising power, giving China leverage, when the process should entail mutual accommodation.

This report charts a course for the Trilateral countries in dealing with China. It considers China’s rise more an opportunity than a threat, and recommends a wide range of economic, strategic, and political actions that would facilitate China’s involvement in the world community. At the same time, it recommends that expectations be kept realistic. All too often, China’s partners have harbored unrealistic hopes for China, and when unmet, China has been blamed for dashing the unrealistic dreams of others. China, after all, is a great civilization, with its own history and traditions. Its path will be shaped largely by internal forces and the choices of its leaders, As the outside world seeks to incorporate China in the emerging world order, it must be remembered that China’s leaders will wish to shape that order to suit their interests and to govern their country in accord with their own vision. The process of meeting this challenge will be a protracted one, involving decades and generations, marked by moments of great triumph and severe setbacks. Patience and persistence are requisites for staying the course.

The interests of the Trilateral countries toward China obviously differ and preclude pursuit of a totally coordinated policy. As distant powers, without alliance obligations, the continental Western Europeans do not bear responsibilities for maintaining a stable balance of power in the region. Britain has obligations toward Hong Kong, and the United States has legislation governing its relations with Taiwan. Japan has a historical involvement with China that neither Europe nor North America shares, while the United States has long exhibited a missionary and ideological zeal toward China that neither Japan nor Europe shares.

Despite these differences, a major set of interests is shared. These can be grouped into several categories or “baskets”: (1) international strategic interests, where the Trilateral countries seek cooperative, responsible behavior by China as a permanent member of the United Nations Security Council, unambiguous Chinese adherence to the Nuclear NonProliferation Treaty and the Missile Technology Control Regime, conventional weapons sales policies that do not disturb regional balances, and acceptance of existing limits on nuclear testing; (2) regional security interests, such as assistance in maintenance of stability on the Korean peninsula and in India and resolution of conflicting territorial claims in the East and South China Seas; (3) interests in Beijing’s adherence to the agreements reached with the United Kingdom concerning Hong Kong’s governance after 1997 and in the continued ability of the people of Taiwan to enjoy a tranquil, prosperous future under increasingly democratic rule; (4) in accord with the United Nations Universal Declaration of Human Rights, interests in the Chinese government’s protection of the basic human rights of its people, out of recognition that any government’s failure to adhere to this standard adversely affects the welfare of all humariity, (5) economic interests in facilitating China’s sustainable growth, in securing market access, and in obtaining a continued orderly Chinese entry into world markets; and (6) interests in obtaining China’s cooperation in addressing the problems of interdependence mentioned above (environmental degradation, population migration, and so on). And for China to be able to respond to these interests, the Trilateral countries have an even more fundamental interest: its effective and good governance, which requires a unified, modernizing, stable, and humanely governed China.

Clearly, the Trilateral countries have a substantial number of significant interests at stake with China. Most of these interests, it should be noted, correspond with the interests of China’s leaders to develop their country in a tranquil environment. Even with the overlap, however, the Trilateral countries seek to influence Chinese behavior on a wider range of issues than they have the capacity to affect over the short run. This necessitates having a sense of priorities and a strategy for encouraging the desired Chinese responses. The priorities recommended in this report are in the security and economic domains and in assisting development of institutions contributing to China’s effective and good governance. Each of the baskets is important, however, and the Trilateral countries should maintain loose linkages among them. That is, progress on all the issues should be quietly reviewed during regular, high-level meetings, and the Chinese leaders must come to understand that failure to advance in one area will restrain progress in other areas. But preconditions should be avoided, i.e., explicitly demanding progress in one area in order to advance another.

This strategy entails approaching China from positions of strength, weaving China into webs of economic interdependence, engaging China in the global economy and in multilateral security arrangements, maintaining frequent extensive high-level dialogue with Chinese leaders, and recognizing the important roles that NGOs and the private sector must play in integrating China with the world community. The positions of strength include a forward-deployed American military presence, vibrant Japanese-American and Korean-American alliances, the continued prosperity and stability of Taiwan and the ASEAN states (with that development extending to Vietnam, Laos, Cambodia, and Burma), and the development of regional and sub-regional organizations and processes in which China is involved.

The following eight chapters elaborate on the themes mentioned above:

Chapter II: China in Historical Perspective
To understand China today and the challenges that lie ahead, one must appreciate the country’s culture and history. It is necessary to be sensitive to both the pride of most Chinese in their ancient civilization and their fears from its more recent traumatic past under foreign domination. A better understanding of both elements in the Chinese psyche can be a great help in guiding Trilateral policy.

Chapter III. The Mainland Domestic Context
Accurately assessing China’s current condition—politically, economically, militarily—is fundamental to understanding its future. Outlining the certainties (such as the continuation of economic reform) and the uncertainties (such as the outcome of the leadership transition) helps set the stage for further discussion of China as it is and will be.

Chapter IV. Hong Kong, Taiwan, and “Greater China”
China’s division into three parts—mainland China, Hong Kong and Taiwan greatly complicates international integrative efforts. Some see the emergence of a “Greater China,” but this notion is of limited utility.

Chapter V. The Chinese Economy: Regional and Global Dimensions
This chapter will delve more deeply into the policy issues associated with China’s economic growth and entry into the international economy Trilateral countries face policy issues in several areas: Chinese exports, China’s import strategy, technology transfer to China, direct investment, and most-favored-nation (MFN) status with the United States. Ways of integrating China with regional and world organizations such as APEC and GATT will also be explored.

Chapter VI. China’s National Security
This chapter examines the military and security dimensions of China’s emergence as a great power. What are China’s security needs and aspirations? How will China’s growing role as an arms supplier affect the international order? What positive contributions might China make in reshaping the regional and global order in the post-Cold War era? The policy implications for the Trilateral countries of a “security partnership” with China are also addressed.

Chapter VII: Global Issues and China’s Role
Health and population issues, environmental degradation, and nonproliferation are some of the concerns addressed in this chapter.

Chapter VIII. The Effective and Good Governance of China
After a discussion of how Chinese think about the task of governance, this chapter examines the implications for political reform of economic development and of China’s recent traumatic history. How should the interest of the Trilateral countries in the effective and good governance of China be expressed?

Chapter IX: Summary of Policy Recommendations
This concluding chapter will summarize and draw together our recommendations to Trilateral countries.

Authors
(titles at time of publication)

Yoichi Funabashi, Washington Bureau Chief and former Beijing Correspondent, Asahi Shimbun.
Michel Oksenberg, President, East-West Center, Honolulu.
Heinrich Weiss, Chairman, China Committee in the East-West Trade Committee of the Federation of German Industry.