China: Duet With the Dragon
Rick Larsen, a 44-year-old fifth-term House Democrat from Washington's Puget Sound, is no headline grabber. Most of the time, he tends to his district's business. As in many parts of his state, that business is often China - more than $4 billion in sales annually from exporters such as Boeing Co. and Microsoft Corp. to the authoritarian, yet distinctively capitalist, Asian giant. "People talk about the Far East. It's my near West," Larsen says.
That's what led Larsen in 2005 to join with Mark Steven Kirk, a moderate Illinois Republican also first elected eight years ago, to form the U.S.-China Working Group for interested members of the House. Lawmakers of all stripes - critics of the country's human rights record, fans of its growing markets, hawks wary of its military intentions - all needed a forum, the two representatives decided, to learn more about the nuances of dealing with China.
The need was particularly acute to Kirk, a longtime intelligence officer in the Naval Reserve, who noticed during weekend stints at the Pentagon that China's economic and military clout came to dominate President George W. Bush's schedule, both in meetings with foreign leaders and phone calls. Members of Congress and the media, according to Kirk, still weren't making the connection.
The days when China could be ignored by official Washington, it's safe to say, have ended.
In the span of a few years, U.S.-China dealings have grown from a wary association dominated by concerns over trade, Taiwan and human rights into a broad, all-encompassing and complicated embrace touching almost every major policy issue and underscored by China's recently acquired status as the United States' biggest creditor.
Indeed, while allies in London, Tokyo and Ottawa may grumble, the connection between the United States and China, underpinned by the two countries' deep economic dependency, has ripened into a "special relationship" that dwarfs U.S. ties with any other country. That is so much the case that critics and supporters alike now speak of a Sino-American Group of 2 - a "G-2" that is becoming critical to managing the global economy and finding solutions to a host of problems. In areas where Washington and Beijing can find a middle ground, the rest of the world may find it necessary to sign on.
Partly, this stems from the realization that because of China's sheer size - it has the largest population of any nation and is poised to overtake Japan as the No. 2 economy within two years - decisions made in Beijing have ramifications for businesses and governments the world over. If lawmakers care about international climate change negotiations, the global financial crisis, product safety or myriad security challenges from North Korea to Cuba, they now have to care about China.
"It's part of an evolution that's been under way for a couple of years," says Nicholas Lardy, a senior fellow and China expert at the Peterson Institute for International Economics. "Today, there is no global issue on which you can make progress without dealing with China."
This shift presents a particular challenge on Capitol Hill, where aspects of the new U.S.-China relationship will be hammered out in energy, economic and security-related legislation, and where "dragon slayers" - adamant critics of the Chinese government on human rights, Tibet, trade and currency policies, to name just a few areas of contention - have long held great sway among the rank and file and at the highest levels.
And even as economic ties grow closer, tensions remain. Although there are signs that lawmakers are taking a more pragmatic approach to China, the dueling dynamics were evident June 2, the day before Treasury Secretary Timothy F. Geithner returned from a visit to Beijing, where he sought to reassure Chinese officials of the safety of their investment in U.S. debt. As of March, the Chinese had lent the federal government $768 billion, up from $118 billion in 2002.
As Geithner's reassurances to the Chinese reverberated on Capitol Hill, the House debated a resolution commemorating the 20th anniversary of the Chinese government's 1989 crackdown on protesters in Beijing's Tiananmen Square and expressing sympathy for those killed, tortured or imprisoned.
"That immorality of siding with a dictatorship, of siding with the gangsters, of siding with the murderers in order to make a short-term profit - is coming back to haunt us now," said Rep. Dana Rohrabacher in a floor speech June 4. The California Republican is an outspoken critic who has long argued that the U.S. government is sacrificing its principles to business interests in its dealings with China.
Rohrabacher has plenty of allies. And Larsen argues that most lawmakers are still adjusting to the fact that the United States' connection to China has become so vast and multifaceted.
"There's a learning curve on both sides," he says. "This is not one relationship, it's many relationships."
Staffing Up
In a signal of the importance the new administration places on China, President Obama has stocked his Cabinet with well-regarded China experts, from Geithner - who grew up in Asia and has taught Mandarin - to Energy Secretary Steven Chu, who ran Lawrence Berkeley National Laboratory and is the son of two Chinese immigrants. Chu has already weighed in on how the United States and China can cooperate on climate change initiatives. Commerce Secretary Gary Locke of Washington was the first Chinese-American governor; he traveled frequently to China on business expeditions and helped arrange Chinese President Hu Jintao's first visit to a U.S. state.
Obama's decision to tap Republican Gov. Jon Huntsman Jr. of Utah as ambassador to Beijing is regarded as a masterstroke both from a policy and political perspective. The Mandarin-speaking trade expert has lived in Asia on three occasions and was seen as a potential GOP presidential contender for 2012. Lesser known nationally, but hugely respected in Asia policy circles, is Jeffrey A. Bader, who previously ran the Brookings Institution's China Center and is now senior director for Asian affairs on the National Security Council. And longtime China watcher James B. Steinberg is now working as deputy to Secretary of State Hillary Rodham Clinton, who made it clear early on that she wanted a piece of the China portfolio.
At Clinton's insistence, the U.S.-China Strategic Economic Dialogue, a forum set up in 2006 by then Treasury Secretary Henry M. Paulson Jr. to facilitate high-level talks with the Chinese, has been broadened to include the State Department. The first round of new discussions will occur in late July in Washington, and one of the critical items on the agenda is climate change. Obama's special envoy on climate change, Todd Stern, was in Beijing last week to lay the groundwork for a U.S.-China partnership on carbon emissions and global warming.
China surpassed the United States as the world's top emitter of greenhouse gases in 2007, and the Obama administration is seeking common ground as the two countries prepare for global climate change talks in Copenhagen at the end of the year. Dennis C. Wilder, who served as senior director for East Asian affairs on the National Security Council from 2005 to 2009, calls the climate change negotiations "one of the first times I can remember needing to engage China to move forward." (Climate issues and China, p. 1370)
Climate is just one more illustration of how "China's becoming embedded in America in a way that it touches all levels now, in a way it didn't in the past," says Wilder, now a visiting fellow at Brookings' China Center, which has offices in both Washington and Beijing.
Elevating this relationship has proved to be a political, cultural and bureaucratic challenge for two countries with very different governments - and economic paradigms. "I think we're grasping for the right mechanisms. We're creating mechanisms as we go along," Wilder says.
In many ways, the political relationship is simply catching up to the commercial one, led by the U.S. multinational corporations that have been flocking to China for years.
"It's really mind-boggling," says Ira Kasoff, deputy assistant Commerce secretary for Asia. Kasoff helps promote U.S. business interests in China through the International Trade Administration. "Our work with China has increased from almost nothing, to now, where it is one of our biggest, if not the biggest, commercial relationship," Kasoff says. "Our largest overseas presence by far is in China."
Moreover, as China develops its vast territory and provides services for its 1.3 billion citizens, including a government push to provide modern health care for its entire population, business opportunities will be huge.
"Almost anything that happens in China will be one of the world's major economic events," said Jonathan Woetzel, a director at consulting giant McKinsey & Co.'s China practice, in a telephone interview from his home in Shanghai. (Economy and China, p. 1368)
Cultural and educational ties have also blossomed. Policy think tanks around Washington are peppered with China experts, programs devoted to China, and Mandarin speakers - the kind of people now in high demand in the State Department's Foreign Service.
"There is a very good opportunity, and, frankly, a requirement, for a serious appraisal of the fact that these two countries are fundamentally intertwined," says Woetzel, who has studied China's efforts to manage its growing urbanization.
Building on Bush's Approach
Last year, both Obama and Clinton had harsh words about China as they campaigned for the Democratic presidential nomination: Obama and Clinton called the Chinese out for keeping the value of its currency, the yuan, artificially low to help its exporters, and both railed about China's trade practices. But in almost five months since taking office, Obama and his secretary of State have moderated their rhetoric and, in many respects, picked up where the Bush administration left off.
As it focused on global terrorism, the Middle East and the war in Iraq, the Bush team generally set aside concerns about human rights issues in China and avoided contentious fights over currency valuations. At the same time, the considerable military tension raised by an April 2001 collision between a U.S. Navy reconnaissance plane and a Chinese fighter jet over the South China Sea all but evaporated in the aftermath of the Sept. 11 terrorist attacks.
And instead, the Bush administration focused on bringing China further into the international financial system.
The expansion of the Strategic Economic Dialogue spotlights the Obama team's decision that bridging cultural and political divides is essential to U.S. economic and foreign policy goals.
The Paulson-led dialogue helped the Bush team and Chinese officials juggle several sensitive issues at the same time and "still have trust when things got uncomfortable," says Taiya M. Smith, Paulson's deputy chief of staff and now a visiting scholar at the Carnegie Endowment for International Peace. "We learned how to pick up the phone and talk to each other rather than make assumptions."
That communication was essential when the financial system came crashing down in late 2008, and Smith and Paulson were on the phone almost every day briefing their Chinese counterparts as they pushed Congress to pass a $700 billion bailout package that would be entirely borrowed in financial markets.
Without China's willingness to lend to the Treasury, the Obama administration would be unable to bankroll the federal deficit.
But it goes both ways: The precipitous drop in spending by American consumers over the past year has shuttered Chinese factories that once made goods for sale in the United States. This has given added heft to the longstanding U.S. view that the Chinese government - which faces its own leadership change in 2012 - must encourage demand at home for its goods and services, and make its economy less reliant on cheap exports.
Conflicted Congress
While administration bureaucrats tend to take a decidedly non-ideological view of the China relationship, Congress remains highly conflicted.
Many lawmakers of both parties object to China's human rights record, and what they contend are intentional Chinese practices of dumping products in the United States below cost to unfairly tilt the trade relationship. China's censorship efforts have also drawn strong criticism, especially as Google Inc. competes for market share in Internet searches with China's homegrown Baidu Inc. Increasingly, and somewhat ironically, many lawmakers also resent China's status at the United States' biggest lender. In Kirk's words, "dragon slayers" still outnumber "panda huggers."
Cheng Li, director of research at Brookings' China Center and a director of the National Committee on U.S.-China Relations, says Chinese leaders express irritation that for many in Congress China's economic importance has failed to overshadow such issues as religious freedom and control of Tibet. "The Chinese government and their lobby have one serious problem: They think that money talks," Li says.
With the two countries' economies and global interests ever more tightly intertwined, longstanding human rights complaints create awkward situations on Capitol Hill.
Consider House Speaker Nancy Pelosi's trip to China last month. In 1991, as a rank-and-file House member from San Francisco, Pelosi infuriated Chinese leaders when she visiting Beijing and unfurled a banner honoring victims of the Tiananmen Square assault two years earlier. But when she visited Beijing this time, she was all smiles and handshakes.
Sharing a goal of the Obama administration, Pelosi wants China to commit to tough reductions in carbon emissions to help broker a global climate change agreement later this year in Copenhagen. So the Speaker showed President Hu the text of a carbon emissions reduction bill recently approved by a House committee and said afterward that when it comes to climate change, "action will be taken by the Congress of the United States."
Back home in early June, Pelosi was asked to defend her attitude adjustment. "We also talked about human rights," she insisted in a news conference.
It's not only human rights criticisms that have moved to the background. Instead of accusing China of moving too slowly - and using that as an excuse for not supporting carbon-control legislation in the United States - some Democrats now acknowledge that China has moved forward with increasingly aggressive mitigation measures of its own, such as the imposition of strict fuel economy measures on new cars. Pelosi's trip demonstrated that many lawmakers see they can no longer afford to focus only on the negatives in the China relationship.
And in a telling change, the debate over whether China manipulates the value of the yuan to promote exports has been pushed aside for now in Congress, though some lawmakers continue to promote legislation that would penalize countries that maintain currency "misalignments."
Still, when it comes to the rise of Chinese imports or China's seeming unwillingness to protect intellectual property rights, the administration is quick to cater to congressional critics. The administration "will not yield on enforcing the right of American businesses and exporters to compete on a level playing field with China," U.S. Trade Representative Ron Kirk said June 2. But he noted that "dispute settlement is a normal and healthy part of relations between major trading partners." And the fact that U.S. companies complain about aspects of China's business climate may signal a maturing commercial relationship, since not too long ago many were happy just to be let into the country.
Rhode Island's Jack Reed, who is a senior Democrat on the Senate Armed Services Committee, says he is "old enough to remember when China was isolated and convulsed by internal revolution." Now, he says, many in Congress see the importance of common interests with China, but they can't let trade and economic concerns simply be pushed to the background. "They have to cooperate and collaborate on a broader agenda than their own national interest," Reed says. "We have to be able to be fairly critical."
Even as the United States leans on China to continue buying U.S. debt, cooperate on climate change and manage the global financial terrain, unrelated and undeniable issues cause strategic tensions.
Notably, those include Chinese targeting of U.S. computer systems, unease about its long-term military ambitions, and its diplomatic forays into Latin America and Africa in search of resources and global political influence. Product safety scandals surrounding Chinese imports are high on the list of trouble spots in the relationship. (Global security and China, p. 1373; product safety and China, p. 1374)
"There are pluses and minuses with regard to China," Mark Steven Kirk says. That's the point of the working group that he and Larsen formed, Kirk says: to "reduce complete inaccuracies" perceived by lawmakers.
Indeed, many in Congress are still feeling their way when it comes to China, figuring out what it means for their states, districts and political priorities, and congressional attitudes toward China are all but certain to evolve in the coming years.
Part of the challenge involves figuring out where the pressure points lie and dealing with a Communist government in which high-level policy is made by a nine-person Politburo standing committee, not an elected Congress and president, yet where local officials play a significant role. More mundane realities include the fact that when Chinese officials are on the phone, someone else in the government may be listening in.
"I don't think we have generally a very nuanced view of the Chinese government's decision-making process," Larsen says.
Members of Congress engaged in the climate change debate may be getting a taste of what's to come as the relationship continues to change. "It is a big, complex country that actually has less control in some areas than one would expect," says Oregon Democrat Earl Blumenauer, a member of the House Ways and Means Committee who accompanied Pelosi to China. "They are extremely hard bargainers. They are proud - 'face' matters."
Banning Garrett, director of the Asia Program at the Atlantic Council and a longtime government consultant on China, suspects that lawmakers hear very little from advocates of greater engagement with China - and plenty from critics.
Yet congressional debates over issues involving China are minimal these days compared with a decade ago, when Congress had to vote every year on whether to grant China "most favored nation" trading status. That was a fight perennially dominated by human rights groups and labor unions on one side and U.S. companies eager to do business in China in the other. The corporations always won - and gained the ultimate victory in 2000, when President Bill Clinton signed into law legislation granting China permanent normal trading status.
"It's people who have a complaint who come and talk to Congress," Garrett says.
Some lawmakers are in the process of updating their view of Asia, a continent no longer defined by poverty and instability, says Edward Gresser, a former aide to Montana Democratic Sen. Max Baucus. For many, "their sense of China was kind of a massive low-wage industrial park," says Gresser, who directs the trade and global markets program at the Progressive Policy Institute.
And coming congressional debates on climate change, trade, defense and a host of other issues will tell whether U.S. lawmakers have kept up with China's sprint from relative Third World isolation to being the United States' most crucial foreign relation.
"The whole relationship with China has changed so fundamentally in the last 10 years," says Republican Sen. Judd Gregg of New Hampshire. "It takes a while to catch up to what the implications are for us, to China and to the world."