COMMON GROUND

Chinaís Security and Economic Interests

Program 0102 January 9, 2001


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(This text has been professionally transcribed, However, for timely distribution, it has not been edited or proofread against the tape.)

ROBERT ROSS: In some respects China hasnít been this secure in over a hundred years. From the Opium Wars, since the civil wars of the mid-19th century, China has been weak, divided, and surrounded by adversaries.

KRISTIN MCHUGH: This week on Common Ground, economics and security in China.

KAREN SUTTER: Chinaís entry into the WTO, into the World Trade Organization, is going to have a quite profound impact on the economy over the long term.

KEITH PORTER: Common Ground is a program on world affairs and the people who shape events. It's produced by the Stanley Foundation. I'm Keith Porter.

MCHUGH: And Iím Kristin McHugh. Regional security remains a top priority as China continues to build itself a new role in the world. Common Groundís HťlŤne Papper recently spoke with three China security experts. Bates Gill is a Senior Fellow in Foreign Policy Studies at the Brookings Institute. Robert Ross is a Professor of Political Science at Boston College. And Evan Madeiros is a Senior Research Analyst at the Center for Nonproliferation Studies in Monterey, California. Bob Ross begins todayís discussion by defining Chinaís security threats.

ROBERT ROSS: In some respects China hasnít been this secure in over a hundred years. From the Opium Wars, since the civil wars of the mid-19th century, China has been weak, divided, and surrounded by adversaries. By the end of the Cold War China had succeeded in establishing either serious influence or a dominant positions on its borders all around its periphery. If you look out there and you ask, "Whatís left?", thereís only one real issue thatís outstanding, and thatís Taiwan. The issue with, of Taiwan, are multifold. One is, they do believe itís their territory and they want it back. But the second issue is a hard-core security interest. That is, Taiwan is to China as Cuba is to the United States. And theyíre determined to prevent another great power from establishing influence on Taiwan that could be used to undermine Chinese security.

H…L»NE PAPPER: Bates Gill?

BATES GILL: More broadly, I think that when China looks ahead to where its security problems lie in the future, it faces a number of dilemmas. One is that traditionally China has been more concerned with its internal borders-sort of land-based threats. But now as China looks out and sees where its threats are emanating from, it sees Taiwan, for an example. Possibly Japan. And maybe most importantly, the forward presence of the United States. Now whatís interesting here is that thatís an entirely new sphere of activity for China in the military realm. Itís in the air and over water, rather than over land.

PAPPER: Evan Madeiros.

EVAN MADEIROS: I think one of the principal emerging challenges that the Chinese perceive to their security increasingly is America, and in particular Americaís influence in Asia. The American relationship with Japan is something they are increasingly concerned about. They see as America controlling the potential for Japanese militarism. As my colleagues mentioned, Taiwan is always at the top of Chinaís national security priorities. But also more broadly, American defense relationships with other nations in Asia causes the Chinese to have a latent concern about whether or not America is really trying to contain China in some degree. Just as a small addition, when weíre talking about Chinese security itís also important to recognize that the Chinese have an enormous number of internal economic challenges that they have to overcome. Particular issues like reform[ing] the state-owned enterprises and dealing with other financial-type issues, I think thereís real concern within the Communist Party about how theyíre going to keep the country stable. So when we talk about Chinese security, itís not only important to recognize the external threats, but also the ones that are coming from the domestic economic situation in China.

PAPPER: Other experts do say that America puts too much attention on Taiwan. And that China doesnít feel that Taiwan is their main threat, but that Russia and India, which are their two very large bordering countries, are much more of a threat right now. Evan?

MADEIROS: I would say that the Chinese from the very beginning of the founding of the Peopleís Republic of China have always placed sovereignty and territorial integrity as one of their top foreign policy and national security priorities. And Taiwan cuts to the very heart of that. So I donít think itís a matter of America putting so much emphasis on the Taiwan issue, but in fact the Chinese.

PAPPER: Bates Gill?

GILL: Well, I think probably in the case of India those analysts who point to it as a problem for China are right. Iím not sure China, the leadership there, has sorted through fully the implications of a resurgent India. In the case of Russia, of course China would always bridle at any reassertion of Russian imperialism, if you will, or hegemonic designs against China, but I donít see any of that coming along very soon in the future. Rather, the contrary. I think China sees in its relationship with Russia numerous opportunities. And that it has the upper hand in many respects to extract benefit from the relationship with Russia.

PAPPER: Do you think China aspires to be a superpower?

GILL: No. I donít think they foresee themselves as becoming a peer competitor or a, on a par with the United States. Theyíre practical, pragmatic folk who understand how long it would take to get there and the kinds of threats they might bring upon themselves were they to challenge the United States in that way. However, we need to recognize, though, that China is well on its way to being the dominant land power in Asia. Thereís no doubt about that. And they would like to solidify that position. And there is going to come a time where their interests in solidifying their regional strength is going to bump up against our interests in the region.

PAPPER: China seems to believe that US ballistic missiles are aimed at them. And some say if China starts building more missiles it could potentially lead to an arms race in Asia.

ROSS: Well, the issue that the United States is currently facing, is do we move from a strategic doctrine of mutual deterrence to one in which the United States builds some anti-missile systems so that we are able to have absolute security from missile threats from others. And the challenge that poses is to the extent that we build a defensive system, it plays a role of a shield. And a shield is a shield and if we can shield ourselves it makes the other without the shield vulnerable. So the danger here is in building a missile shield for ourselves, do we stimulate the Chinese to build more missiles so they are not uniquely vulnerable to nuclear weapons. And do we stimulate an arms race? We havenít come to grips with it and developed a national consensus. But is an arms race possible out there? Yes it is.

PAPPER: Evan?

MADEIROS: I just want to add to that, that I would argue that the central strategic nuclear challenge between the US and China over the next few years will be to manage the issue that Bob mentioned, which is the National Missile Defense program. Now, if America were just an island in the middle of nowhere the National Missile Defense would make strategic sense. But itís not. Security is a relative concept. Itís security relative to other countries around you. And in the cases of Russia and China the National Missile Defense could have a dramatic impact.

ROSS: Well, I think we finally found something we might differ on. I do agree China is modernizing its nuclear program. But I think the goal is to make a minimal second strike capability more secure and more stable rather than raising the profile of nuclear weapons in its overall defense strategy. Indeed, I look at Asia, I see that most of the conflicts in Asia can be maintained relatively, with relative stability, with the conventional military balance. And so I donít need, see the need for either power to inject the nuclear strategic balance into the local balance. The US-China relationship is not an easy relationship, because we are the two major powers in the world. And the most important bilateral relationship in the world is never easy in history. The question is not, are we going to get along or not. You know, weíre really not. The question is what kind of great power competition are we going to have.

PAPPER: China really seems to be pulling in its border regions, such as Tibet, such as Hong Kong, by exporting its political influence, markets, culture, into areas that arenít predominantly Chinese as of now. And that seems to be to reinforce unification throughout the country. Do you think this is a positive or a negative as far as the security issues go? Bates?

GILL: I think there is an increasing concern in China to keep stable relations between the center and the periphery. This has been an historical concern for China, throughout the centuries. And remains so today. And I think all Chinese leaders are deeply steeped in the realities of Chinese history. And probably stay awake at night concerned over their ability to maintain the, their legitimacy as leaders through the management and cohesion of what is essentially a centrifugal force thatís being played against their country. The fact that theyíre able to maintain stability in places like Xinjiang or in Tibet or elsewhere, is probably a good thing. I donít think anyone would benefit from a China that somehow collapses internally. There would be just enormous ramifications for regional security that I think weíd be better off not facing.

PAPPER: Do you think though, that a loss of control is something that they still have to keep in mind? Do you think that destabilization in China is still a threat? Robert Ross?

ROSS: When you have a minority population thatís near the borders you pay attention. I donít care whether itís China; I donít care whether itís India; I donít care whether itís any country. This is a country which has border problems. Itís got many neighbors, 16 neighbors. Those 16 borders are populated with unloyal minority peoples. It pays attention. The larger picture, is that something that could come to dominate regional politics, come to dominate its foreign policy concerns? That is less likely.

PAPPER: How do you see Chinaís security evolving in the next decade? Robert Ross, letís start with you.

ROSS: I foresee very little change. I think Asia is the, the strategic boundaries in Asia are fairly stable. There is the Taiwan issue and thereís the Korean issue. Korea, of course, is a mystery to everyone. We could wake up tomorrow and we could be 180 degrees from what it was yesterday, which is 180 degrees from what it was the day before. We just donít know. Prospects for a war, however, and major conflict, are very slim. And I think all the great powers have an interest in preventing that, and that includes China. The Taiwan issue, of course, is the most volatile, but everyone knows the rules of the game, and we know how to keep Ďem.

PAPPER: Bates Gill?

GILL: I think I wouldnít be as sanguine as Bob seems to be. But, because I do think that while the likelihood, perhaps, of widespread conflict in East Asia, or between the United States and China is certainly less than 50 percent, and maybe much lower, nevertheless particularly over the Taiwan issue, and because it involves a third party, letís say, that weíre not always so certain of its directions and our ability to control those directions. And it has sort of introduced an entirely new factor to the Taiwan Strait question, namely the democratization of the island, that it presents new uncertainties that we canít dismiss. So I think as China grows stronger and as we move into a period where weíre going to be dealing with a more capable, likely to be a more wealthy, a more diplomatically effective, and in many ways a more militarily powerful China, weíre gonna have to address that new reality in ways that doesnít upset the balance out there in the region.

PAPPER: Evan Madeiros?

MADEIROS: Iíd agree with Bates. I think looking at it from Beijingís perspective, although the broad architecture of Asia, as Bob suggested, is relatively fixed now, there are a limited number of challenges. Whether it be Taiwan, American influence in Asia, Americaís alliance with Japan, US National Missile Defense and Theater Missile Defense programs, the Chinese still have a very, very, very mixed view of the international security environment. Although they say that "peace and development remain the main trends of the time," thereís also this schizophrenic element of Chinese security posture, which talks about the variety of threats associated all over the world. The Chinese are increasingly becoming sensitive to transnational threats like the spread of Islamic fundamentalism, terrorism, proliferation, drug trafficking. So, as I suggested, although the broad architecture isnít changing, theyíre becoming much more sensitive to a series of other regional-oriented issues, which is going to keep them guessing in the future. That combined with the fact that we need to always think about the domestic context in China. You always have to be, when you think about Chinese security you have to be thinking about the leadership, you have be thinking about political trends, and economics in China. And thatís going through a fundamental transformation.

ROSS: Evanís right on the mark there. Chinaís been a remarkable 15, 20-year boom. But itís at the cusp. If it gets through the next five years one can have a high degree of confidence that it will make it into a fairly stable, modern economic system with a growing pluralism in its political system. But it may not make it. These five years are the same five years that make an Indonesia collapse. They make a Sri Lanka collapse. The odds of them making it-we donít know. But most countries, most of the time, donít make it. So the future of Asia is very much wrapped up into how the Chinese manage the crises of economic modernization. And what are they? High crime rate; high unemployment; high inequalities; and high corruption. And theyíre all peaking as we speak. And Chinaís ability to manage all four of those will affect the legitimacy of its government. If that government fails its economy will fail, and thatís where Asia will be affected.

PAPPER: Robert Ross is a Professor of Political Science at Boston College. We also heard from Bates Gill, a Senior Fellow in Foreign Policy Studies at the Brookings Institute, and Evan Madeiros, a Senior Research Analyst at the Center for Nonproliferation Studies in Monterey, California.

MCHUGH: Chinaís economic transition, next on Common Ground.

KAREN SUTTER: When China opened its door economically in 1978 it made an explicit decision that it would allow some areas to develop before others. And so I think looking ahead they really saw this coming down the road.

PORTER: Printed transcripts and audio cassettes of this program are available. Listen at the end of the broadcast for details, or visit our Web site at commongroundradio.org. Common Ground is a service of the Stanley Foundation, a nonprofit, nonpartisan organization that conducts a wide range of programs designed to provoke thought and encourage dialogue on world affairs.

MCHUGH: China is the worldís seventh-largest economy and itís now in full transition. As it opens its markets to the world China is allowing its economy to become more Westernized and capitalistic. Common Groundís HťlŤne Papper discusses the changes taking place with Director of Business Advisory Services at the US-China Business Council, Karen Sutter. Also joining the discussion is Susan Lawrence, the Beijing correspondent for the Far Eastern Economic Review, and Jianwei Wang, a Visiting Scholar at the Sigur Center for Asian Studies at George Washington University. Karen Sutter begins by defining Chinaís economic system.

KAREN SUTTER: Itís a socialist market economy. Itís an economy very much in transition from a planned economy to a market economy. And itís an economy that is increasingly interdependent with that of the world economy.

PAPPER: Susan Lawrence?

SUSAN LAWRENCE: Yeah. And part of, I mean, being a socialist market economy means that they have a legacy of state-owned industries which are now trying to make a transition away from the traditional state industry model. Thereís actually a fairly major program of privatization underway, although the government isnít calling it that. But in effect thatís whatís happening.

PAPPER: Weíve seen that China is opening its doors to the world and slowly adopting capitalist doctrines and the concept of a free market economy. So how do you think capitalism is impacting peopleís lives on a day-to-day basis, especially those who arenít in a metropolis area? Jianwei Wang?

JIANWEI WANG: Yeah. I think that the market economy has both a positive and negative impact on peopleís daily life in China. On the positive side as you know that now the Chinese people have much more job opportunities, mobility, and also the living standards of the Chinese people at large has been greatly improved. On the negative side I think you have increasing disparity of income and then also all kinds of structural problems coming out from this economic reform. Well, I think that in the United States, I have to say you have this kind of a misperception, is that it looks like all those problems are created by the communist system in China. But actually you can argue this is products of the primitive stage of capitalism in China.

PAPPER: Susan Lawrence, do you agree with that?

LAWRENCE: Well, I mean certainly what weíve seen is China in some ways rushing headlong into kind of a capitalist model, but without a lot of attention sometimes to things like social security, building a social security system that will actually look after people better. In the old system your state-owned enterprise provided your housing and your healthcare and your pension and your child care and everything under the sun. And these days theyíre trying to make enterprises leaner and meaner. Theyíre cutting jobs and cutting back on benefits and putting people on contracts. But there isnít really a system out there to sort of pick up the slack. So a lot of people are left kind of stranded, without the means to pay for healthcare properly or without a secure retirement ahead of them. And that is causing a lot of concern. I mean a lot of people in the cities are very worried about that. The countryside has many, many fewer certainties actually. I mean, the countryside has really zero in terms of a social security system to look after people.

PAPPER: Jianwei, you wanted to add something?

WANG: Yeah. I just, exactly the point I want to point to make is that, you know, you tear down the old system but you still donít have a new system in place. Thatís a problem in China in many respects.

PAPPER: Chinaís government, while being interested in market freedom is not opting for political freedom. Do you think a free market economy is possible without political freedom? Karen?

SUTTER: I think that there is significant political change and political reform thatís going on in China at all levels. It may not be viewed distinctly through the prism that we might look at it as Americans, or it may not be as dramatic as change in other countries. But China is looking at reforming its institutions. Itís looking at government reform at various levels. There are village-level elections which are experiments as they try to move that system up. There is a lot of experimentation going on in lots of different areas.

PAPPER: Susan Lawrence?

LAWRENCE: But I think what China is not interested in is a Western-style multiparty democracy. They are rhetorically committed to the idea of democracy or democratic government and create a more representative government. But they want to be able to do that without challenging the leading role of the Communist Party. Thatís quite a challenge. Weíll see, yes, in the next few years, how well theyíre able to pull that off. It may be that in their efforts to make the Communist Party better representative of the people they may end up, in fact, creating conditions for a transition to a different kind of politics which does involve perhaps multiparty, contested politics.

PAPPER: Letís take a look at how increasing development, modernization, could affect the environment in China. Is that a consideration right now?

LAWRENCE: Yeah. In fact, through the Ď80s and into the early 1990s, the Chinese leadershipís position was very much that it couldnít afford to worry about the environment. Again, that that was a luxury. And that only when China had sort of caught up with the West, then it was willing to sort of deal with some of the Westís concerns about the environment. They felt it was very unfair that Western countries which had got rich by polluting the environment should be turning around and saying to China, "You canít get rich the same way." But that whole mindset has really changed just in the last few years, and realized that they need to be embracing much more sustainable development and that thereís not much point in raising production and getting rich if the result is gonna be a horribly polluted environment for ever after.

PAPPER: So with this increase in modernization and urbanization, the people who live in the farmlands, who live in rural areas, what are they going to do? Jianwei Wang?

WANG: Well, you know, as you know, that there are a lot of people, farmers, they left the countryside and moved to the big cities, and creating a bunch of problems for the urban areas. So this is a floating population, is a big problem for China. And you know, you might want to say then, it also exacerbated the environment problem of the big cities, with this huge flow of population. So, one way I think the Chinese government is contemplating to solve this problem, surplus laborers from the countryside, you know, one strategy they have discussed quite a bit is try to establish sort of small-to-medium size cities around the countryside. And try to quicken this, the speed of urbanization in China. Instead of building metropolitan areas they try to build more kind of small-size, medium-size towns and cities to settle those surplus laborers. But to what extend it could be successful we still have to wait and see.

PAPPER: Susan, do you think that could work?

LAWRENCE: Well, I guess I have a slightly different take on the migrant workers. I mean,I think migrant workers are actually terribly important to the life of the cities. Chinaís got a very funny policy, adopted from the Soviet Union, of, itís got a residents permit system, kind of an internal passport system, which very much restricts the movement of labor around the country. So that when migrants come into the cities they come in as very much second-class citizens who can be booted out of the cities at any moment. There are people, a lot of people, who are saying that, in fact, one of the ways that the government could be trying to improve that overall situation, but particularly the situation of the unemployed in the countryside, is in fact to start lifting some of those restrictions and allow people to actually move around more, to move into the cities to create new-creating new cities the government is doing, but basically to lift some of those restrictions and actually more people to be moving than are already.

PAPPER: This movement and this shifting seems to lead to inequality gaps between people. And thatís traditionally something China has been against. Do you think they can keep these gaps from taking place under this capitalist economy? Karen?

SUTTER: When China opened its door economically in 1978 it made an explicit decision that it would allow some areas to develop before others. And so I think looking ahead they really saw this coming down the road. It is a concern because as the coastal zones and coastal areas, major cities such as Beijing and Shanghai have developed, the inequality gap has widened. There are several ways that they try to deal with that. One are payments that family members send back from the cities to their relatives in the rural areas. But again, itís a difficult issue. Thereís also programs where the government tries to force wealthier areas to adopt poorer areas in the interior as far as payments and programs, etc. But itís really debatable how successful this really is and to what extent itís only political.

PAPPER: Jianwei Wang?

WANG: Yeah, I think that the Chinese leadership is aware of the political danger of this increasing gap in terms of economic development in different areas in China. Thatís why recently the government made a strategic decision to the opening up of the west part of China. Basically to try to reduce the gap between the west and the east by putting more money into the economic development of the western part of China. They are also trying to attract more foreign investment.

PAPPER: Where do you see the Chinese economy headed in the next few years?

SUTTER: I tend to be relatively optimistic. Weíve highlighted a lot of tensions domestically within the economy. There are a lot of headaches for the leadership that lie ahead. I think as weíre watching what happens itís very important to keep in mind that Chinaís progression will not be linear. Weíre not going to be able to track it by annual trade statistics or even annual investment statistics. That said though, I think there is a general consensus among the leadership of the need to continue to open up and reform the economy and that they will continue along that track.

PAPPER: Susan?

LAWRENCE: Yeah, I mean, I think that Chinaís entry into the WTO, into the Trade Organization, is going to have a quite profound impact on the economy over the long term. And over the short term, weíre going to see greater unemployment; weíre gonna see certain industries hit hard and other industries being able to compete quite successfully in the world economy.

PAPPER: And Jianwei Wang?

WANG: Yeah. You know, just like many other East Asian countries China was adversely affected by the recent financial crisis. People had a lot of worry whether China can sustain, kind of even moderate economic growth. But it seems, it seems to me that the macroeconomic policy of the government so far has been quite successful. And China already got out of this financial crisis and, for example, this year the projection now is at about eight percent in terms of economic growth. I think they have done something positive in terms of the reform of state-owned enterprises. And also I think that the government has done quite good in terms of foreign trade, sustaining kind of increase of the growth of foreign trade. That will help the economy, too.

PAPPER: Jianwei Wang is a Visiting Scholar at the Sigur Center for Asian Studies at George Washington University. Susan Lawrence is the Beijing correspondent for the Far Eastern Economic Review, and Karen Sutter is the Director of Business Advisory Services at the US-China Business Council. For Common Ground, Iím HťlŤne Papper.

MCHUGH: Cassettes and transcripts of this program are available. The transcripts are free; cassettes cost $5.00. To place an order or to share your thoughts about the program, write to us at: The Stanley Foundation, 209 Iowa Avenue, Muscatine, Iowa 52761. Please refer to Program Number 0102. That's Program Number 0102. To order by credit card you can call us at 319-264-1500. That's 319-264-1500.

PORTER: Transcripts are also available on our Web site: commongroundradio.org. Commongroundradio is all one word. Our e-mail address is commonground@stanleyfdn.org. For Common Ground, I'm Keith Porter.

MCHUGH: And I'm Kristin McHugh. HťlŤne Papper is our Associate Producer. B.J. Liederman created our theme music. Common Ground is produced and funded by the Stanley Foundation.

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