Carnegie-Tsinghua Global Dialogue

As the bilateral relationship between the United States and China grows increasingly global in nature, the two nations’ leaders have acknowledged the need to create a new, more constructive bilateral framework that encourages cooperation to deal with international issues. Such a framework is necessary to avoiding major competition between a rising and a status quo power, especially in the security arena. 

The Carnegie-Tsinghua Global Dialogue’s plenary session examined the key characteristics required to successfully put a new model of major power relations into practice. The session included keynote remarks by former Australian prime minister Kevin Rudd followed by a discussion with CCTV’s Rui Chenggang and a dialogue between Carnegie-Tsinghua’s Yan Xuetong and Carnegie’s Douglas H. Paal, moderated by Carnegie-Tsinghua’s Paul Haenle. 

A Global Relationship

• Developing New Relations: Rudd proposed three ways to develop a new framework for U.S.- China relations: regular working-level summits, an agreed-upon working agenda on common policy projects, and the appointment of point people within both administrations to manage the relationship. Paal emphasized the importance of the new framework in dispelling any points of tension between a rising power and current power. 
   
• Need to Govern Security Issues: Yan explained that healthy competition will continue to play a major role in the relationship between China and the United States, but a new framework is necessary to resolve real international security issues such as cybersecurity. 
   
• The Importance of Sunnylands: Paal cited the recent U.S.-China summit at the Sunnylands Estate as a sign that the United States and China both have peaceful goals. Moving forward, Paal added that both Xi and Obama must guide their respective military and diplomatic departments toward reducing points of friction between the two countries. Rudd noted that the Sunnylands summit was a positive example of diplomacy and highlighted the summit’s themes of mutual respect and cooperation. 

Operationalizing A New Relationship

Speakers agreed that the new relationship between China and the United States must be operationalized incrementally. Paal recommended increased collaboration in naval security as one possibility, while Haenle stressed the importance of U.S. policymakers being more open to Chinese suggestions during summits and meetings. 

• Cybersecurity as a Starting Point: Yan emphasized the importance of U.S.-China cooperation on cybersecurity and recommended that bilateral negotiations between the two powers start with this issue. He added that the economic relationship between the countries was already, in comparison to security issues, relatively open. Creating new security norms starting with cybersecurity is crucial to bringing cooperation between the two countries to the next level, said Yan. 
   
• Improving Military Cooperation: Despite recent advancements in military-to-military collaboration, China and the United States need to improve communication and openness between their respective militaries. Paal suggested that U.S. military schools accept more Chinese students for exchange programs and that both countries navies should visit the other country’s Air Defense Identification Zone centers in order to build practical exchange and improve understanding of the other side’s military capabilities and objectives.  

Points of Caution

• New Great-Power Relations: Rudd stated that while the idea of “a new type of great-power relations” is an important step forward, it is still primarily a headline-grabbing concept waiting to be filled with content. Haenle noted that the phrase itself raised suspicions in the United States when Xi first floated the idea, as many worry it is simply an effort by China to compel the United States to concede to China’s core interests. 
   
• Importance of Diplomatic Transparency: Rudd explained how the fundamental basis of former U.S. president George W. Bush’s foreign policy was “no surprises” and that this emphasis on diplomatic transparency was still important. Paal said China’s recent announcement of its Air Defense Identification Zone was a misstep and highlighted the need for diplomatic transparency; the United States and other nations were not briefed beforehand and could not react in a constructive manner. 
   
• Managing Frictions Between Militaries: Rudd pointed out that military moves often hijack diplomatic moves. As the power gap between the United States and China closes, the points of potential military conflict will increase. Thus, Rudd explained that areas of conflict, such as territorial disputes between China and Japan, need to be stabilized. Paal added that the U.S. industrial military complex also contributes to this friction. For China’s part, as its economic, political, and military capacities grow, the country will begin to assume greater responsibility in its regional neighborhood. Speakers agreed that both the United States and China need to be cautious of potential frictions. 

 See attached for former Australian prime minister Kevin Rudd’s keynote remarks. 

When U.S. President Barack Obama and Chinese President Xi Jinping met at a summit in June 2013, Xi proposed the two countries forge a “new model of major country relations.” The two leaders emphasized the need for mutual understanding and trust as key vehicles for cooperation. 

In a panel moderated by Rui Chenggang of CCTV Carnegie’s Douglas H. Paal, Christopher Johnson of the Center for Strategic and International Studies, former Chinese ambassador to the United States Zhou Wenzhong, and Yang Jiemian of the Shanghai Institute for International Studies discussed the challenges and opportunities facing the U.S.-China bilateral relationship. 

Strengthening the U.S.-China Relationship 

Panelists agreed that the relationship between the United States and China has been shrouded in misunderstanding that has led to distrust. Developing channels for clear and constant dialogue between the two powers is essential, they asserted.

• Increasing Military-to-Military Exchanges: Panelists stated that military-to-military exchanges are crucial to building trust between the United States and China. One panelist explained that counterparts should be in contact with one another to ensure an equal level of military-to-military exchange, both in terms of rank of participants and the quantity and quality of the exchange. 
   
• Transparency About Core Interests: Panelists agreed that mutual understanding between the two powers requires understanding the key interests of the other side. One panelist noted that Xi and Obama’s agreement to form a new type of great-power relations is an important step, since defining the nature of the relationship is an essential foundation for building a constructive framework. 
   
• Focus on Areas of Success: U.S.-China dialogue too often becomes mired in contentious topics such as territorial disputes, panelists said. Several added that the two nations should focus on areas where successful cooperation is attainable. One panelist offered climate change as a potential focus and suggested avoiding issues where both sides may perceive the other as having a hidden agenda. However, they added that such issues can not be overlooked, and should be closely managed through nuanced, high-level dialogue.

A History of Distrust

• Reasons for Distrust: One panelist suggested that China’s history of being colonized is an important factor in its skepticism toward other countries, particularly world powers. Another countered that China’s distrust is a remnant of its Cold War mentality. Panelists agreed that China needed to overcome its distrust in order to achieve better cooperation. 
   
• Master Plans: One panelist explained that both the Chinese and U.S. publics believe the other country has a “master plan” of containment. To counteract these misperceptions, another suggested that increasing diversity of media coverage of China would allow the U.S. public to have a more accurate and improved perception of China, and the same for increased diversity of coverage in the United States. 
   
• Avoid Topics Without Desirable Outcomes: Chinese and U.S. participants agreed that inflammatory issues such as the Diaoyu/Senkaku territorial conflict, cybersecurity, and North Korea should be avoided in order to foster a positive relationship. However, they added that these issues could not be overlooked and should be closely managed through nuanced, high-level dialogue. 

Opportunities for Cooperation

Panelists evaluated the channels available to the United States and China for building positive relations, focusing on expanding trade through the Trans-Pacific Trade Partnership (TTP) and cultural exchange. 

• Economic Benefits of TTP: Two panelists emphasized that the Trans-Pacific Partnership is not a tool intended to balance against China’s growing economy or limit China’s involvement in the dynamic East Asian market. They added that China was welcome to join and there would be a number of monetary and political benefits for China if it did join the TTP. Another scholar countered by suggesting that perhaps the United States still valued competition over cooperation and needed to address this mentality in order to move forward with improving relations with China. 
   
• Role of Soft Power: Panelists agreed that increasing cultural exchanges between the two countries is one avenue to improving relations. However, another panelist pointed out that even this was unbalanced as there are more Chinese students in the United States. Another panelist responded that there were a number of scholarships and campaigns to encourage U.S. students to study abroad, especially in China.

China’s influence in East Asian security has grown with its economic rise. However, in order to resolve maritime territorial disputes in the East and South China Seas, China will have to work constructively alongside regional powers to find mutually beneficial multilateral solutions. 

In a panel moderated by Hannah Beech of Time Magazine, Li Jianwei of the National Institute for South China Sea Studies, Ian Storey of the Institute on Southeast Asian Studies, Carnegie’s Michael D. Swaine, and Zhu Chenghu of China’s National Defense University discussed China’s role in East Asia regional security.

Impact of China’s Rise on Regional Security

Panelists noted that the United States and major East Asian powers, such as Japan, often have difficulty accepting China’s role as a major security power in the Asia Pacific region. 

• Regional Tensions: All the panelists agreed that there are a multitude of tensions between countries in the Asia Pacific. The longstanding territorial and historical tensions between China and Japan are well known, but tensions between Japan and South Korea and among Southeast Asian countries also persist. Another pointed out that the U.S. rebalancing toward Asia has been perceived by some within China as an attempt to contain China, adding to the regional tensions. 
   
• China’s “Assertive” Foreign Policy: Several panelists pointed out that Western countries have not been the only ones to describe Chinese foreign policy as “assertive”—Vietnam and the Philippines have also claimed this, and have had a number of skirmishes with China in recent months involving disagreements over land and maritime territorial sovereignty. Another panelist reminded that these problems are partly a matter of perspective—China’s renewed preeminence in the region is relatively recent, and it will take time for the region to adapt. 
   
• Role of the United States: Panelists discussed how strong U.S. commercial and political interests in the Asia-Pacific region have motivated the Obama administration to re-focus its diplomatic and economic policy agendas there. Indeed, one panelist explained that the United States still needs to be more active in creating a new cooperative framework to help deter any destabilizing behavior among regional powers. 

Establishment of China’s Air Defense Identification Zone (ADIZ) 

China announced the establishment of its East China Sea ADIZ in late November 2013, to the surprise of other regional powers. The ADIZ covers the disputed Senkaku/Diaoyu Islands and has increased the probability of conflict in the region. 

• ADIZ Timing: Several participants asserted that criticism of China’s actions in regard to the ADIZ should focus on the timing and definition of China’s announcement. They argued that the Chinese had given advanced notification to South Korea, but not to Japan or the United States. The lack of notification led to an increase of tensions in the region. They added that China’s requirements and plans for enforcing the zone have not been made clear. Another panelist responded that other countries have not notified China prior to creating their own air defense identification zones. ​​
   
•  Motivations for Establishing the ADIZ: One participant suggested that by establishing the ADIZ, China has signaled its desire to resolve tensions deriving from territorial issues with its neighbors, while others asserted that it was needlessly provocative. A panelist explained that the creation of the ADIZ was intended to increase communication between parties in the region, and that the negotiation of an air code of conduct would be a great success for the zone.
   
• Legitimacy of the ADIZ: Most panelists confirmed that although there was no legal grounding for China’s creation of an ADIZ, other countries have established similar zones in the past. Another panelist explained that creating an ADIZ was the right of any sovereign state. However, this particular ADIZ is more problematic because it includes international airspace and overlaps with Japan’s ADIZ over the Senkaku/Diaoyu Islands. 

Continuing Tensions in the South China Sea

The tensions in the South China Sea have recently escalated due to a number of factors, including rising nationalism in China, the Philippines, and Vietnam. Addressing and managing these competing claims for territory and exclusive economic zones is essential to easing regional tensions and decreasing the potential for conflict. 

• An Increasingly Militarized Conflict: Panelists explained that the growing competition over maritime resources has become increasingly militarized in Asia, citing China’s rapidly modernizing navy as an example. However, the increasing presence of the U.S. Navy in Asia has further complicated the disputes and tensions. 
   
• Need for Bilateral Compromises: Panelists agreed that multilateral talks being pursued by China and ASEAN over the last few years have produced few results. Most panelists believed that joint development in the region is unrealistic, and that bilateral agreements would be easier to reach than multilateral ones. One scholar suggested that countries should start by forming bilateral agreements on fishing rights in areas of overlapping claims, given the importance of the region as a source of food. 
   
• Complete Resolution of Territorial Conflicts Unlikely: The panelists agreed that completely resolving the territorial conflicts in the South China Sea was unlikely. Instead, the focus should be on conflict management and crisis prevention mechanisms. They explained that without these steps, an accidental clash in the region could quickly escalate into a large-scale crisis. 

China’s continued economic development at home and its expanding economic footprint abroad is lending added strategic importance to its relations with the Middle East. China is becoming increasingly dependent on oil imports from the Middle East, while the United States is becoming increasingly energy independent due to a surge in domestic energy production and falling energy consumption. In response, the Chinese Communist Party introduced policy initiatives during the Third Plenum in November 2013 to try and shift China away from energy-heavy industries toward environmental conservation. 

In a panel moderated by Andrew Browne of the Wall Street Journal, Leiv Lunde of the Fridtjof Nansen Institute, Pan Guang of the Shanghai Academy of Social Sciences, Jean-Francois Seznec of Georgetown University, and Zha Daojiong of Peking University discussed the effects of China’s evolving energy demands and the changing political and economic dynamics in the Middle East. 

The Future of Energy Cooperation

Panelists agreed that the ongoing political and security uncertainty across the Middle East, coupled with the fact that there are no international organizations that could contribute to international energy cooperation, significantly limit China’s capacity to contribute to energy governance. 

• Expecting the Unexpected: One panelist emphasized that policymakers should expect the unexpected in the next five to twenty years in terms of future Middle Eastern security, political structures, and energy development. Major political shifts are likely to occur as a result of uprisings in the Middle East. The effects of the shale gas revolution, future climate change policies, and potential developments in energy extraction technology make it difficult to predict energy trends. 
   
• Missing Energy Cooperation Mechanisms: Chinese companies share a vested interest in stable business environments. One panelist explained that the Chinese are increasingly aware of the need for comprehensive risk analysis and the relationship between political stability and energy security. However, this balance will be difficult to achieve as there is in no independent, overarching international energy cooperation system to assume this responsibility. 
   
• Thinking Creatively: A Chinese participant argued that Chinese companies have a long way to go with their Middle East operations and need to think more creatively. Companies should diversify the structure of their operations and internationalize their management teams. The panelist added that the set-up of corporate social responsibility projects should incorporate the views of the local population. Chinese companies can improve their communication with NGOs in order to ensure that local interest groups understand their operations. China should also hedge against risk by improving the vertical integration of its energy projects. The panelist noted that allowing private companies to dominate China’s energy industry is not necessarily the best policy since the government plays a crucial role in quality control. Government regulation could be compromised if China’s energy industry is composed of primarily private operations.  

Problems with China’s “March West” Policy

A Chinese panelist outlined two major problems with China’s “March West” policy in regards to energy policy in the Middle East. The policy is designed to counteract potential disruptions to China’s energy supply via the Malacca Strait. 

•  Environmental Impact: One panelist noted that given Beijing’s recent policy priorities aimed at reducing pollution, China should avoid increasing oil imports from regions west of China via heavily-polluting overland pipelines. Instead, the panelist suggested that importing liquid natural gas would be a more environmentally friendly option. 
   
• Economic Versus Security Interests: A panelist pointed out that currently China makes investments in energy transport infrastructure in countries located at its western borders based solely on economic considerations. The panelist noted that security concerns in these countries must also be taken into account, as these risks could ultimately outweigh the costs of transporting liquid natural gas via tanks from further locations like Australia or the Malacca Strait. 
   
•  A Reliable Energy Source: Another panelist said that the Middle East, and particularly the Gulf, will remain China’s main energy source. While China has growing energy interests in Central Asia, Russia, Latin America, Africa, and Australia, the Middle East offers greater stability, reliability, and quality. 

Dispelling Myths About the Energy Industry

• U.S. Role in the Middle East: One panelist explained that in spite of recent media reports, the United States is far from becoming oil independent. The panelists agreed that the United States is not likely to reduce its political or military presence in the Middle East because of decreasing dependence on oil from the region. Another panelist questioned the accuracy of the recent International Energy Agency report claiming that China had overtaken the United States to become the world’s largest net oil importer, given that Washington still imports ten million barrels of oil per day. Finally, the panelist added that Washington has a long-term interest in freedom of navigation of the region’s waters and will continue to invest in regional security. A panelist concluded that China will continue to benefit from the security provided by U.S. presence in the region. 
   
• Implications for Global Energy Cooperation: Panelists agreed that there has been a reluctance at the multilateral level to promote dialogue on energy cooperation. But panelists noted that given the growing importance of Asia to the Middle East’s energy market, such dialogue is especially crucial between the United States and Asia, particularly China, India, South Korea, and Japan.

In September 2013, Chinese President Xi Jinping conducted his first tour of Central Asia, visiting Turkmenistan, Uzbekistan, Kazakhstan, and Kyrgyzstan. During his trip, Xi signed agreements to enhance China’s energy security, deepen cooperation with Central Asian governments on border security, and unveiled his “new Silk Road” policy of free trade and exchange. 

With the United States scheduled to withdraw its military forces from Afghanistan by December 2014, numerous questions have arisen over Central Asia’s regional security and economic development, and the impact on China-Russia relations. To address these questions and challenges, Carnegie-Tsinghua hosted a panel moderated by Zhang Yuan’An of Caixin and featuring Hu Hao of the China Center for Contemporary World Studies, independent scholar Bobo Lo, Filip Noubel of Internews, and Zhao Huasheng of Fudan University.

Major Interests in Region

Panelists explained why both China and Russia have a vested interest in improving their ties with Central Asia.

• Regional Security: One panelist explained that Moscow is most concerned with the spread of radical Islam to Russia. Another panelist noted that China is also concerned about instability in Central Asia and the potential impact on stability in Western China. This is a significant factor in why China pursues economic cooperation with Central Asia. 
   
• Economics and Energy: A panelist explained that China’s interest in the region is primarily driven by economics and energy needs. Another added that while this was the case in the past, Moscow is now worried that China’s growing economic influence may soon translate into political and strategic competition with Russia in Central Asia. 
   
• Russia’s Counterbalancing: Russia’s proposed Eurasian Union with Central Asia is an effort to reestablish Russia as a global power in a multipolar world, remarked one panelist. He added that the growing influence of the EU and China in the region has pushed Russia to try and counterbalance by forming its own integration project. Another panelist noted that a Eurasian Union is a potential strategic concern for China because it demonstrates that Central Asian countries may ally with Russia on long-standing Russian-Chinese border disputes.

Central Asia Poses Significant Risks

Despite significant opportunities for Russia and China in Central Asia, the regional also poses several potential challenges to the security and diplomatic objectives of both countries. 

• China’s Image and Newcomer Status:  One panelist explained that anti-Chinese propaganda in former Soviet republics after the Sino-Soviet split created a negative image of China in Central Asia. He added that China cannot compete with Russia’s cultural influence in the region. Another panelist disagreed, noting that China’s newcomer status offers it a clean slate and an advantage over Russia’s tainted Cold War legacy among Central Asian countries.​​​
   
• Governance and Stability: Panelists agreed that the collapse of any Central Asian country would be a grave security threat not only to its immediate neighbors but also China and Russia. One added that some of these countries, in particular Tajikistan, are poorly governed and have the potential to become major regional crises.
   
• U.S. Withdrawal From Afghanistan: One panelist noted that the Central Asian countries, as former Soviet republics, are hesitant to involve themselves in Afghanistan due to the historical association to the Soviet invasion. On the other hand, with the U.S. withdrawal imminent, another panelist reiterated that Russia remains worried that instability in Afghanistan could spill over to Central Asia and Russia.

Future of Central Asia

As China’s relations with Central Asia deepen and the region grows in economic and geopolitical importance, numerous questions remain about Central Asia’s role in regional and global affairs.

•  Next Generation of Leadership: One panelist noted that the next generation of Central Asian leaders have studied abroad in China and the West, and thus may bring a more open-minded, international approach to its leadership style. Another panelist countered that the introduction of leaders with international educations is unlikely to have an impact on governance styles. 
   
• Future of Afghanistan: China has formed a strategic partnership with Afghanistan, stated one panelist, by increasing aid and giving public support to the current government. However, the panelist added that Afghanistan’s problems could only be solved through domestic dialogue, not foreign involvement. Another argued that if China continues to develop its economic presence in Afghanistan, it will inevitably become a greater political and security actor with its own interests to protect.
   
• Mutual Benefit: One panelist explained that Russia was concerned that the increased Chinese economic influence in Central Asia will lead to strategic cooperation that excludes Moscow. Despite this, he added that Russia hopes to benefit from Central Asia’s economic development through China’s investment in the region.