Many observers believe the current relationship between Washington and Beijing is the best it has been in over a decade. The strong rhetoric and tense encounters of the first year of President George W. Bush's administration have given way to growing signs of bilateral cooperation in several areas. What explains the current turnaround? Is a more cooperative Chinese foreign policy of a tactical or strategic nature? What actions or events could bolster, or disrupt, the current relationship? In particular, how might the war in Iraq and the North Korea crisis affect it?

To examine these and other related questions, the Carnegie Endowment's China Program has invited former U.S. Ambassadors Chas W. Freeman and J. Stapleton Roy to present their views at a special lunch forum, Explaining the Turnaround in the U.S.-China Relationship.

Ambassadors Freeman and Roy are both retired career Foreign Service officers with extensive, in-depth experience in China and Asia. For further information, please see attached biographies.

Michael D. Swaine, Co-Director of the Carnegie China Program, will serve as the moderator for this event--the first in a yearlong series of seminars and discussions examining the durability of the current Sino-U.S. rapprochement.

Ambassador J. Stapleton Roy
Ambassadors Chas W. Freeman
Questions and Answers

Conference Summary

Dr. Michael Swaine, Introductory Remarks

There is a common understanding that the U.S.-China relationship has recently improved to an unprecedented level. The purpose of this panel is to examine this turnaround, its origins, its features and the challenges that lie ahead, particularly with regard to security issues. Subsequent panels will discuss the U.S. relationship with Japan and Taiwan and their implications on the relationship with China, the perspectives on the nature of security deterrence, the role of economics in defining these relationships, and the new outlook on security thinking in China.

Ambassador J. Stapleton Roy

In thinking about the current good state of U.S.-China relations, one has to bear in mind the rapid changes which are taking place in the international arena and to consider their effect on how we will deal with China in the future. Every country in the world is considering the implications for them of the speed with which the United States toppled the Saddam regime in Iraq. Although it is much too early fully to assess the results, we should assume that the old international structure is no longer the same. The deep division across the Atlantic, manifested in the French - German - Russian alignment against the United States, is certainly unprecedented in the post World War II period. Views differ on whether the split is beyond repair or whether the United States should make a major effort to repair the damage.

Within this context, Chinese leaders are faced with momentous decisions regarding US-China relations. On the one hand, they realize the importance of the relationship to their economic development strategy: they need continued access to American investments, markets, technology and education. They also need a peaceful environment in East Asia in order to accomplish their development goals. These are the unchanged factors.

On the other hand, the Chinese see clearly that the U.S. role in the world is changing. The Chinese military must see the relevance to the North Korean crisis of the demonstrated effectiveness of the U.S. military and of U.S. high-tech weapons in Iraq, which far exceeded their performance in the first Gulf War. They see also that the shape of the international order has changed. The United Nations has been weakened; important countries, including close U.S. allies, have been willing to show solidarity in opposing U.S. policy in Iraq. The cost of such opposition has increased but so has the temptation to restrain U.S. freedom of action. Therefore, China has a new set of options to consider in its relationship with the United States: some constant factors and some choices that did not exist before.

China's course may depend in large part on how the United States behaves toward China in the months ahead. The bilateral relationship could be jeopardized if the Chinese believe the United States is committed to continuing the "arrogant" use of force to settle international disputes. However, if the United States reaches out to Beijing, there are strong incentives for China to want to work with the United States. This could help keep the bilateral relationship on a good track.

The aspect of the "Rumsfeld Doctrine" that seeks to restructure our military presence abroad could also have important implications for the U.S.-China relationship. Such restructuring could have the unintended consequence of negatively affecting the perception in the region of the U.S. commitment to the defense of its allies and friends there. If East Asian countries conclude that Chinese power is growing while the U.S. defense role in the region is weakening, this will alter their view of the United States.

Fortunately, the U.S.-China relationship is in decent shape at the moment. This could be attributed to two main reasons. First, the administration found a strategic reason for cooperation with China in the war on terrorism, and this has been extended to broader global issues. Second, President Bush gave Chinese leaders stronger assurances concerning his commitment to a one-China policy. Consequently, the Chinese leadership has more confidence that the fundamentals of U.S. China policy are not subject to change.

We should not forget, however, that despite the newly found strategic cooperation, there are lurking problem areas that need attention. First, mishandling of the Taiwan issue could overwhelm the trend toward improvements on other fronts. The political process in Taiwan has put in office a president from a party that openly advocates Taiwan independence - a status that China has made clear it would use force to oppose. Therefore, it is important for the United States to handle its relationship with Taiwan carefully. Second, the US government needs to do a better job in integrating its public statements about China. Instead of declaring our desire for closer ties with China while simultaneously condemning Chinese policies on various issues, we should make clear that a constructive relationship with China will enhance our ability to deal with troubling aspects of Chinese behavior. Third, China shares the disquiet of many other countries about U.S. military predominance. We need to find ways to reassure China about our intentions. Fourth, there are the uncertainties about China itself. Will China continue on the path of economic growth? To what degree would a slow down undermine the regime's legitimacy? Will political reforms be implemented in a timely fashion? These are important questions, particularly, because of China's size and importance. How these issues are dealt with can significantly affect US-China relations.

Finally, a major goal should be to halt the militarization of cross-Strait relations, which accelerated in 1995 when Lee Teng-hui visited the United States and Beijing resumed the use of threats to deter independence moves. This requires improved communications between all the parties involved, especially since China's natural steps to modernize its military will complicate the task of assessing their intentions toward Taiwan. Therefore, the United States should avoid any appearance of support for Taiwan independence, while ensuring that Taiwan is strong enough to deter any Chinese temptation to seek a military solution.

Ambassador Chas W. Freeman

The U.S.-China relationship experienced some difficulties at the beginning of George W. Bush's presidency. The Bush administration declared China a strategic rival, rejected any policy of military-to-military contact, and undertook a substantial re-writing of the Taiwan Relations Act in some presidential remarks. This demonstrated that neither the United States nor China knew how to handle their bilateral relations.

The relationship, however, started to improve for a number of reasons. First, the lack of a clear enemy in the beginning of Bush's presidency changed after the September 11 attacks when Osama bin Laden and his terrorist network rose as the clear threat to American security. Second, the creation of the 'axis of evil' concept has successfully directed the American focus away from China. Third, the Bush administration has discovered that China could be a useful actor in times of regional crises, as was the case during the Indo-Pakistani escalation and the North Korean crisis.

Several factors on the Chinese side have helped improve bilateral relations as well. China has realized that confrontation with the United States is counterproductive, and against its own interests. In other words, China has decided that it will not let itself be provoked because its strategic interests outweigh any potential benefit from confrontations. The Chinese leadership is trying to build domestic prosperity and, so far, it has successfully managed to stay on the right track. This has, in turn, reflected on the attitudes of the Chinese population, who have become more confident in their country's capacity for leadership.

Nevertheless, the above factors did not change some of the ongoing problems between the United States and China. The American press coverage of China remains erratic at best and overwhelmingly negative. Furthermore, there is still a considerable contrast between the U.S.-China relationship on the government-to-government level, and the relationship between the two societies, on the individual, cultural and business levels--which has been experiencing tremendous progress. Unfortunately, neither country is reaching out to its generation of future leaders to consolidate these improving trends. China's new leaders remain somewhat unfamiliar to the United States, while the Chinese are still perplexed with Bush's leadership. One has to wonder why neither country is proactively trying to improve bilateral relations at the local level if they are serious about building a strategic partnership.

Admittedly, the war on terrorism has brought the two countries closer together than before, and has enabled the leaders to turn a new leaf. Yet, counter-terrorism cooperation is not a sufficient basis upon which to build a strategic partnership between such major players in world politics. The Taiwan issue remains a potential flash-point in U.S.-China relations. Despite the reduction of U.S. military sales to Taiwan in the 1980s, last years' record arms sales package to the island has compelled Beijing and Washington to look at Taiwan largely in military terms.
China has refrained from expecting the United States to be helpful or neutral in resolving the Taiwan problem through political means. As a result, China has been following a two-pronged strategy. First, it is attempting to build a united front whereby it can convince constituencies within Taiwan that closer integration with the Mainland is ultimately more beneficial to them than independence. The success of this process is evident in the large number of Taiwanese who reside in the Mainland, the growing cross-Strait trade and investment, and the cultural exchanges that occur without the knowledge of the Taipei government. This integration, in turn, lowers the threshold of force that would be required to bring Taiwan to the negotiating table. Second, China is building the capacity that can enable it to coerce Taiwan to the negotiation table. The two components of this strategy work hand-in-hand. The more successful the united front is, the less coercion would be required; while the less successful the united front is, the more coercion would be required. In any case, China intends to have the necessary components according to the deadline set in 1999, which is expected to be in 2008 after the Beijing Olympics. In the meantime, China has decided not to provoke Taiwan, while also deterring provocation from Taiwan.

China is waiting for a return to the One-China framework, which would make the Taiwan issue manageable in the long run, and removes its urgency, even as Beijing prepares for the possibility of failure. In conclusion, China's policy with regard to close U.S.-Taiwan relations has been: do not alarm, build capabilities, do not antagonize, hope for the best, prepare for the worst, and do not gamble unless you have a winning hand.


The Neo-Conservative Perspective

In a discussion of the neo-conservative view of U.S.-China relations, Dr. Swaine explained that the neo-conservative thesis has three dimensions for future U.S. policy towards China. First, the United States has to place China's diplomatic importance in context. Accordingly, the United States would have to value and strengthen its relationship with its close allies, rather than directing excessive energy towards improving U.S. diplomatic relations with China. This dimension was, however, significantly reconsidered after September 11. Second, increasing U.S. military deployment in East Asia is necessary to deter China from any hostile acts that could threaten the region's stability. This dimension was also undermined to some degree because of September 11 and the Iraq war. Third, the neo-conservatives believe that it is important for the United States to increase Taiwan's military capabilities, which could deter China from taking coercive action. Implementing this objective has, nonetheless, been challenging given the fact that Taiwan's legislature has delayed the purchase of American arms.

Ambassador Freeman also argued that viewing China as a dangerous rival that has to be contained could become a self-fulfilling prophecy. Increasing U.S. hostility towards China could result in an equally abrasive reaction. So far, he added, there is no evidence that China's growing strength is being used to threaten U.S. interests, but is rather focused on its economic comparative advantage. Ambassador Roy also emphasized the necessity of taking a diplomatic approach in U.S. relations with China because the alternative would be counter-productive.

The National Security Strategy

Ambassador Roy expressed his concern with the new National Security Strategy's emphasis on preemptive strikes. He argued that this strategy is not a doctrine, but rather an asserted right. America's stance has resulted in India indicating that it would have the same right to preemptively attack Pakistan, if deemed necessary. With regards to China's view on the matter, he explained that China is cautious about endorsing this policy because it is alarmed at the potential implications it could have on China's own security interests. Dr. Swaine further elaborated that China is also concerned about its regional interests in the Korean peninsula in light of the preemptive strike strategy. Such a strategy, he argued, increases North Korea's insecurities, which in turn decreases China's ability to adequately engage the region. Ambassador Freeman added that it is ironic that, during the last century, generations of U.S. policy-makers have spent decades pursuing the establishment of international legal order while facing opposition from countries like China. This century, on the contrary, has witnessed a continued U.S. deviation from international law, with China being the party that is disturbed by such violations.

The Implications of Taiwan's Democracy

Ambassador Roy clarified his remarks on Taiwan's democratic process. He stated that democracy in Taiwan is certainly encouraged regardless of the outcome. The election of a Taiwanese president who hails from a political party that advocates independence from China could be destabilizing to cross-Strait relations; but that does not diminish the importance and necessity of Taiwan's democratic process. One should not assume, or take for granted, that democracy will always result in outcomes favorable to U.S. interests.

Although he explained that it is difficult to predict the implications of the 2004 elections, Ambassador Roy was nonetheless optimistic about Lien Chan's recent statements, which indicated his disagreement with Chen Shui-bian's approach and his willingness to return to the 1992 consensus. Ambassador Freeman agreed with this view and argued that Taiwan has to be considerate of U.S. interests in formulating its policies. However, he also emphasized the importance of respecting the decisions of any democratic process.

The Economic Dimension

Examining the economic dimension of the U.S.-China relationship, Ambassador Freeman maintained that the Bush administration has demonstrated considerable interest in strengthening bilateral economic relations. The administration's domination by former businessmen and CEOs could only affirm this view. Ambassador Roy added that trade and investment should not be obstructed by political considerations unless such economic integration could highly jeopardize the country's security. While Taiwan has to incorporate security considerations in assessing its trade with Mainland China, the United States, he argued, should not be in the same position. Rather, free trade with China would prove beneficial to both economies.

Both panelists agreed that further Chinese integration into ASEAN is a positive phenomenon. Ambassador Roy argued that while Asian free trade agreements could benefit China more than the United States, it is the normal progression of free trade, as long as it is not the result of protectionist or discriminatory policies. Ambassador Freeman explained that China's replacement of the United States as the largest market for Foreign Direct Investment (FDI) should induce healthy competition that could promote economic growth. He encouraged the U.S. leadership to evaluate the reasons behind the American regression. He also indicated that although China's successful growth is partially responsible for their attractiveness of FDI, the U.S. failure to attract more investments is also to blame. The reasons for this failure include the loss of investor confidence due to recent financial scandals (e.g. Enron), America's increasing unilateralism, and the heightened harassment of foreigners in the new visa regulations, which hinder the attraction of foreign business.