CHINA : Does Beijing Signify Anything, With Power Flowing to Provinces, Cities?

One problem among the many that vex Sino-American relations has received little notice: the inability of the Chinese central government to control many activities outside Beijing.

An example is the U.S.-China disagreement over unauthorized Chinese copying of U.S. intellectual property. Last year, China’s Ministry of Foreign Trade and Economic Cooperation negotiated an agreement with U.S. representatives that included a promise to shut down 29 factories suspected of pirating American computer software, music and movies. But most of the offending factories continue to produce the counterfeits, with some of them now reportedly turning out more expensive CD-ROMs of just-released software. In response, the United States threatened last week to impose trade sanctions unless China lived up to its agreement.

China’s piracy problem stems, in part, from its trade ministry’s lack of control over the factories producing the illegal copies. In China’s councils of state, the ministry does not have the muscle to compel other ministries and organizations, such as the Chinese army, to close down profitable enterprises.

Another troubling illustration of the problem surfaced recently. Bruce Reidel, a deputy assistant secretary of defense, testified before a House committee about Chinese chemical companies helping Iran develop chemical weapons. “China’s chemical industry,” he said, “is very rapidly growing at this time, and not all facets of it may not be under the fullest scrutiny of the Chinese government.” Reidel was being diplomatic.

During the last 15 years, China’s remarkable economic reforms have been made possible by the devolution of power from Beijing to provincial and local governments. These and strong central organizations, including the Chinese military, are loathe to surrender their autonomy. But this dilution of Chinese totalitarianism limits Beijing’s reach over the rest of the country and threatens to impair China’s performance as a member of the international community. Kenneth Lieberthal, a China specialist, has written, “Beijing’s ability to discipline its own localities and citizens to obey its international agreements and to abstain from opportunities for illegal gain has significantly eroded.”

A more extreme view is taken by Gerald Segal, director of the Institute for International Studies at the University of Technology in Sydney: “In some aspects of its foreign relations, power has simply been decentralized, and no one, except assorted individuals acting independently, has taken up that power . . . Beijing may sign international agreements on textile exports, protecting intellectual property or halting trade subsidies, but the central authorities are unable to control the violation of such accords.”

China has long been less monolithic than it appeared to the West, and some would contend that the disarray many Western observers see today has existed ever since the People’s Republic was established in 1949. Because local autonomy was granted by Beijing, rather than wrested from it, the new reallocation of power does not signify political disintegration. But implementation of any policy or law is usually inconsistent and uneven, a frustration often magnified by the slow-moving Chinese bureaucracy. Also, even though central-government control is slackening, so, too, is that of local governments, because the market is gaining, as Beijing and regions want.

Nonetheless, the problem of institutional weakness is real. China seems less able to take responsibility for fulfilling the international agreements it has signed than at any time since the People’s Republic was founded. The extent of the continuing decentralization raises the acutely difficult question of how the United States should shape its dealings with a country that is steadily increasing its economic power without enhancing the internal controls and discipline it needs to fulfill its responsibilities.

To some, it might seem tempting to deal with the holders of decentralized power. In international trade, it makes sense for foreign investors or traders to act where problems emerge. The Americans whose intellectual property is being pirated could seek enforcement in cities and provinces where the counterfeiting is going on by bringing suit under Chinese law. This would put pressure on local governments to end the illegal conduct or suffer declining U.S. investment. It might also be appropriate, or necessary, to take the next step and urge Washington to exert pressure at the regional level, not only on trade but on other issues, including security-related issues.

Yet, a local approach in dealing with China would be dangerous. Power has been so diffused, and the situations in each region are so different, that the United States would end up a clumsy and ignorant actor among fractious factions. Furthermore, Beijing would no doubt vehemently object to any moves to deal directly with specific regions, a reaction all the more intensified by painful memories of Western attempts to carve out enclaves in China during the 19th Century. Already, Beijing is paranoid about possible U.S. desires to “contain” China.

Washington must thus continue to act as if Beijing is the government of China, while making it clear that Chinese leaders will be held accountable for failing to carry out their international obligations, even if violations can be traced to regions or organizations defying their orders. For example, if a Chinese enterprise exports products that China has agreed not to sell abroad, whether missile-related or produced by child or prison labor, whatever sanctions are applied must treat Beijing as responsible. Diplomacy assumes that the nation-state is the basic unit in the normal conduct of international relations. No less should be expected of China’s government in Beijing.

Ironically, the decentralization problem may be made more acute by U.S. attempts to deal with it. It would be easy for the United States to sound like a moralizing bully, hectoring and nagging Beijing about its failure to act according to standards that the United States takes it upon itself to define and impose on other nations. At the same time, China cannot be treated as less obligated than other nations to keep its word. Discreet diplomacy, not accusation and defensiveness, should be used to try to manage this problem. The threat of sanctions should be a last resort. But the dispute over intellectual property also illustrates that if diplomacy fails, sanctions may be required to remind Beijing that it must keep its word.*