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Saturday, May 25, 2024

GVS Exclusive Interview: U.S.-China Relationship and The Rise of Chinese Dragon

GVS Managing Editor Najma Minhas sat down with Rory Daniels, the managing director at the Asia Society Policy Institute, to look at US-China relations.

Henry Kissinger, former Secretary of State of the United States, who passed away a couple of days ago. Among other things, he will be remembered as the man who took that secret flight out of Pakistan to visit China and Premier Zhou Enlai in 1971, starting the US-China relationship. Until his death, he believed that these two countries have a unique ability to bring peace to the world. However, the past several years have seen more tensions than unity between the two countries. The two leaders recently met during the current tumultuous times with war raging in Ukraine, Russia, and the Middle East to do a deep dive into the relationship and its trajectory.

GVS Managing Editor Ms. Najma Minhas sat down with Rory Daniels, the managing director at the Asia Society Policy Institute, to look at US-China relations.

GVS: Rory, what are your thoughts on Henry Kissinger’s role in US-China relations?

Rory Daniels: Kissinger obviously played a pivotal role in US-China relations, being one of the architects of the US opening to China in the 1970s. But beyond just that diplomatic maneuvering, he also built around him a team of real China expertise that has continued to be influential in the 50 years since the early visits in the 1970s. He was a champion of looking at the US-China relationship not just as a series of geopolitical and geostrategic moves, but also considering how to get two societies that are so different to work together cooperatively or at least to deconflict where possible. He was absolutely influential in shaping how America thinks about China and in building bridges between the two countries.

One story I really like is when I had the opportunity to bring Dr. Kissinger into a track to discussion on US-China relations about 10 years ago. He was very open to taking questions from young people, always encouraging the next generation of scholarship and leadership on China issues. Someone asked him, “What do you think is the most important thing to study if I want to be in US-China relations?” He said, “Study Chinese classic literature and culture, study the things that do not change day to day that are indicative of how the people of the country view their role in the world and their relationships with outsiders.” He emphasized understanding the broader history and culture, being able to see the world through someone else’s eyes. I was very grateful for that advice, even though I was a slightly older scholar at that time.

GVS: Regarding the recent statement by President Xi during the APEC summit in mid-November, expressing that the world is vast enough for both China and the US to achieve success and suggesting that the success of one country should be seen as an opportunity by others—what are your thoughts on this?

Rory Daniels: The nature of the relationship that President Xi was suggesting that the two countries should have is something that US-China did have until around a decade ago. For example, during the 2008 financial crisis, the Chinese growth, which really took off, was credited with preventing the world from going into a deep recession. So what has changed since then? Many things have changed, but I’m not sure that, in aggregate, things are so fundamentally different than they were in the early 2000s to 2010.

The major factor that has changed is China’s growing military power, which is at the core of all concerns in the US about China. China’s ability to translate its economic success into power projection, whether through the military or economic, political influence, etc., is a significant concern. Another change is the influence of political cycles and social media in the US. There’s a broader pattern of US strategic thought regarding America’s role in the world, whether to be isolationist or activist. We’re in the middle of a push and pull on that issue in the United States. The bipartisan consensus on China is based on both isolationist and interventionist views, seeing China as a main competitor.

GVS:  If we think about China, the thing that really attracted the United States initially was, and if we keep the communism part of the Cold War Communist Party on one side was the economy. It was the fact that as Bill Clinton said, it’s a one-way street; we should give China the MFN. We need to bring China into the WTO, though China is going to open to United States goods. So, they saw it very much related to how much benefit the United States was going to get out of China, that if we will now think about it upon reflection, what the largest trade deficit that the United States actually has is with China.

Right now, it is less than $400 billion, but it is the largest trade deficit. That has not worked out the way the United States may have thought it would. Is that an element of this insecurity? I mean, the world almost sees it as the United States had this free, open liberal system which they espoused throughout the 20th century. And then yet, suddenly, in the early 21st century, this insecurity, we need to do protectionism, you know, epitomized by Trump, America first. Is it because they are feeling that China is going to overcome them? They are going ahead of them, as the economic trajectory seems to show is that what is driving this insecurity? Do you think it is an insecurity?

Rorry Daniels: I do think it is an insecurity, I think all countries have big insecurities. How to deliver the benefits of a globalized economy to common Americans is a massive amount of insecurity because the political mandate in the country in the United States comes from that collective sense of the middle class and lower-class America. I think that that is really where the rubber meets the road on this question. There has been a fair amount of historical criticism of the attitude of the people who you mentioned, who brought China into the global trading system and said that they should be allowed to ascend to the WTO and that over time, the economic growth of China would create an opening in their political system. From my perspective, you kind of have to work with the information you have at the time. And China, just like the United States, changes based on who is in charge.

The national interest remains constant, but the priorities shift. One aspect of US-China relations and the evolution over time toward a more hawkish view that I consistently contemplate is whether those policymakers, at the time, were working with the information available. China, in the early 2000s, appeared on a trajectory of reform and opening that had the potential for substantial, enduring political reform. While it did not materialize, the policymakers’ perspective likely considered the information accessible at that time. Policymakers lack perfect information, and without a 20-year crystal ball, they work with the available information, striving to influence desired outcomes. In this bilateral context, particularly with a complex country like China, forcing specific outcomes is challenging.

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That is the generous interpretation. A more cynical perspective, which resonates with many Americans today and is reflected in the symbolic significance of the trade figures, suggests that policymakers of that era prioritized corporate interests over those of the common American people. The opening to China has proven beneficial for some Americans and multinational corporations but has not delivered broadly shared advantages.

GVS: I am a former banker, and I used to sell derivatives. The 2009 crisis occurred because so many average Americans could not pay back their mortgages at the time. Well, how were they able to afford those mortgages? They were able to afford the mortgages because the Chinese were buying the bills. And because they bought so many bonds, US bills, bonds, the interest rates were low enough that the average American could go out and buy stuff.

Similarly, in the US in the 1990s, late 1990s, and everything was there were fewer things, and they were much more expensive. Now I go to the markets, and I am shocked there is just a plethora of cheap Chinese goods everywhere. So, the consumer has really benefited in several ways. So, is it not very much a narrative? Is it not just a way of telling the story that the American politicians have not been able to tell that part of the story, which is that the consumers have definitely done really well out of China?

Rorry Daniels: Absolutely. There is so much to the story that does not get properly put into context in the media. That is certainly a very important part of the story, which is that consumer prices have remained very low because of the advantages of a globalized economy. Without those advantages of a globalized economy, we do not know what the average American economic picture would look like today. Unfortunately, that is not a part of the story that gets told. What is salient with the American public are other parts of the story. One is about the loss of manufacturing jobs in the United States.

It is true that, while I personally do not see a one-to-one connection, nor am I an economist, the rise of China’s economic strength coincided with a serious deterioration of manufacturing jobs in the United States. You cannot blame it all on China; that has to do with a larger globalized economy. It also has to do with technological innovations that came in and made human-centered manufacturing work less profitable here and less necessary. So, there is a bigger picture at play.

For the average American person who also is just looking at what strikes them as most important, they are very concerned about the widening gap of inequality inside the United States. So, it is very easy to make an enemy out of multinational corporations that did benefit from this opening to China without considering some of the aspects of this broader economic picture that you very rightly point out.

You brought something up that was really interesting twice now, which is the US-China cooperation after the 2008 financial crisis. Another aspect to consider is reflecting back and analyzing whether we made a mistake by encouraging China’s accession to the WTO, by paving that path. What would it have looked like if we did not do that? I believe there’s another scenario to explore, one where we did not establish a relationship with China built on a positive affirmative vision of what the countries can achieve together. How would we have emerged from the 2008 financial crisis or any crisis over the last 20 years without China’s support and help? I think these are the kinds of questions that I pose and answer to keep people honest about the trajectory here and the overall benefits of fostering a positive relationship with China.

GVS: There is an ongoing debate between isolationism and retrenchment versus the idea that the US should play a more active role globally. When considering China, another aspect emerges. Over the past 100-150 years, the world has been predominantly influenced by Western countries with a Judeo-Christian philosophical foundation in their values, shaping both their ideology and the global system. China represents a fundamentally different philosophy. To what extent do you think this aspect is influencing global dynamics? Particularly, as we observe Europe and the United States standing united against China, is this unity rooted in a clash of philosophical values?

Rorry Daniels: On the surface, there is undoubtedly an element of this, but as with many things, it is more complex. China’s political influence globally, especially in emerging and developing economies, is seen by the US and Europe as implicitly endorsing authoritarian governments. While there is a values-based component, there is also an economic competition aspect. As China ascends the economic value chain and its indigenous companies compete globally with traditional Western multinational corporations, the narrative of values becomes more prominent. However, when looking at the overall global landscape, it is crucial to recognize that security, values, and the economy do not perfectly align in any country-to-country relationship.

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With the exception of Australia, none of the US security allies in Asia were democracies when they received security guarantees; many were authoritarian. Realpolitik has always played a role in America’s global relationships. Even today, certain partnerships are deemed necessary for advancing interests in security, stability, democracy, and peace in regions like the Middle East, despite differing political systems. While values are a factor, they complement other anxieties and competitions. Using values alone as a driver for US national policy would be oversimplified.

GVS: Given the fact that the United States places so much importance, as you mentioned, on the Middle East, China’s increasing involvement in that region, and the position that has been given, for example, earlier this year, we saw the Saudi and the Iranian replenishment, which was it which took place under Chinese guidance in a way they helped them to come together. We saw that last month, there was a whole series of Middle Eastern leaders who went to China to get China’s buy-in on what should the solution be to what is occurring right now in Israel. How does the United States perceive this increasing role of China in the world? In the world? Is US worried about the values that the Chinese will start espousing?

Rorry Daniels: I think what has been helpful and perhaps instructive for the United States to consider when it looks at China’s role in mediating conflicts abroad is that China tends to be relatively hands-off about active mediation. Of course, it has had some recent success in using its convening power, for example, the deal between Saudi and Iran mentioned was instructive in that sense. But when you look at what China is willing to do actively to manage, it tends to be more offering rhetorical and philosophical support for their interests in the conflict than some sort of active role.

I think the US still sees China as a potential partner when it comes to looking at conflict in the Middle East, even in Europe. In Europe, with the situation in Ukraine, there is a lot more concern in the United States about China’s role because of the China-Russia relationship. But I think Chinese interests in the Middle East are fairly well known and transparent: their economic interests, because the Middle East does have major emerging markets, right to sell Chinese goods, their energy interests, because China needs to meet its energy needs through imports, it is not energy independent. Overall, I do not get the sense that the US thinks that China is going to take on the risk that a country like the US has taken in trying to actively mediate conflict in the Middle East.

GVS: Doesn’t the fact that China refrains from engaging in the politics of other countries, focusing instead on extracting economic resources, obligations, trade agreements, and the like, raise concerns for the United States? Particularly given that China doesn’t prioritize values the US emphasizes, such as human rights and the democratic system. China’s pragmatic approach, which attracts local governments seeking financial benefits without imposing ideological requirements, poses a potentially more appealing partnership on the domestic political front. So, to what extent does this dynamic worry the United States?

Rorry Daniels: It worries the United States to some extent, but I think it is a worry without a solution or a viable alternative. So much of how the US conducts its international relations does have to do with this idea of the US being an example of democracy and a defender of human rights. And that is deeply ingrained in the US political culture and our international relations. I think it would cause much more anxiety in the United States if China was actively trying to shape domestic political environments in the Middle East more towards the type of environment that it looks like in China. China is very pragmatic and will work with whatever government is in charge. China does not believe it has the right to tell another country how to govern itself. And therefore, it does not want the United States or any other country to tell it how to govern China and the Chinese people.

GVS: Thinking about the meeting that transpired in San Francisco, some positives emerged. While not of major significance, how crucial were these developments, specifically the reduction in fentanyl production that the United States sought and the military cooperation they aimed for?

Rorry Daniels: The importance of these developments lies in two aspects. Firstly, they are vital to U.S. national interests and secondly, they contribute to global peace and security. The Fentanyl crisis has profoundly affected the United States, touching the lives of individuals, their families, and friends. Any efforts by China to diminish the supply of fentanyl in the U.S. system are both welcomed and appreciated. This has tangible effects on American society, with communities deeply affected. Globally, there is a shared interest in preventing the export of precursor chemicals used in fentanyl production. While the crisis is acute in the United States, opioid trafficking is not exclusive to the region or Americans.

On the military-to-military front, it is critically important that the two largest economies, one being the world’s foremost military power, and the other aspiring to modernize its military capabilities, establish communication. This dialogue is essential not only to address specific issues or crises but also to build a foundation of relationships between the defense establishments. This understanding of each other’s strategic intentions can help reduce misunderstandings, misconceptions, and address bilateral problems. Furthermore, it allows for consideration of how the combined strengths of the U.S. and Chinese defense establishments might contribute to conflicts in other parts of the world.

The timing of these developments, occurring just before the U.S. election cycle and Taiwan’s election cycle, is also significant. A third positive outcome is the reassurances between the U.S. and China regarding the non-use of military force in the Taiwan Strait. These developments demonstrate responsible management of the U.S.-China relationship and counteract misleading political narratives, making it challenging for certain messages to gain traction.

GVS: There was a noticeable reduction in China’s aggressive “woke warrior” type policy in the lead-up to this meeting. Why do you believe this shift occurred?

Rorry Daniels: I am not certain if it was solely tied to this meeting. While it is undoubtedly related, it is not entirely coincidental. My analysis suggests that this shift is more connected to domestic politics in China rather than a specific strategy of diplomacy. The rise of “Wolf Warrior” diplomacy was influenced more by internal political dynamics in China and how they were reflected through the global social media and news information cycle.

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GVS: Could the state of the economy have played a role in the reduction of the aggressive “wolf warrior” diplomacy, considering the discussions around China’s economic challenges and its need for a better position vis-à-vis the United States?

Rorry Daniels: I offer a somewhat different perspective. While it is plausible that economic considerations influenced the decision to curtail “wolf warrior” diplomacy, it is worth noting that this shift occurred around the time China anticipated an economic upswing during the early stages of lifting COVID controls. The correlation between economic performance and the decision is not straightforward. Instead, I believe the tightening political environment within China played a significant role. Chinese officials perceive their political fortunes as linked to loyalty to Xi Jinping and his policies. Demonstrating loyalty, particularly in a politically constrained environment, often involves adopting an assertive stance against those deemed insufficiently loyal, whether internal or external actors. Over time, China likely recognized that such signaling, primarily for domestic purposes, had negative repercussions globally. It is encouraging to witness a degree of self-reflection within China about its diplomatic conduct, addressing concerns expressed by the U.S. diplomatic community regarding China’s historical lack of self-reflection.

GVS: Now, moving forward, looking beyond the next year due to the ongoing U.S. election year, what are your final thoughts on the trajectory of the U.S.-China relationship? Do you anticipate a continuation of current trends or the possibility of a more balanced situation?

Rorry Daniels: Predicting the relationship two years into the future is challenging, as it depends heavily on the U.S. leadership and its policies toward China. There is potential for significant shifts in either direction. However, the enduring national interests of both countries, marked by interdependence and shared global problem-solving, suggest that this pattern may persist for the foreseeable future. Recognizing that political actors and philosophies in both countries will evolve, my underlying thesis is that the direction of the U.S.-China relationship will be shaped by choices in both nations. Over time, these choices should align more closely with our national interests, emphasizing peaceful or cooperative coexistence. The evolving landscape in both China and the U.S. indicates that the relationship in 2040 will differ from that in 2020. Consequently, our national interests should guide us towards establishing a foundation that prevents further escalation into conflict.

Watch the full interview on GVS Dialogue: