Is There More to U.S.’ China Policy Than Business Interests?

The beginning of the Chinese New Year, the Year of the Rat, has not eased tensions between Washington and Beijing. Defense Secretary William J. Perry warned that China should live up to its claim to be a responsible world power and that the United States is “not committed to engagement at any price.” Although Perry’s words were principally aimed at China’s military threat to Taiwan, they also reflected Washington’s frustration with Beijing’s continuing rebuff of the administration’s efforts to achieve a coordinated relationship.

Indeed, there are ever more signs of strain in U.S.-China relations. Despite its many promises, Beijing has failed to stop piracy of U.S. intellectual properties, made little progress on its human-rights record and continued to sell arms to Pakistan and Iran. These failures, while casting doubt on the wisdom of the Clinton administration’s policy of “constructive engagement,” will surely give new vigor to China foes in Congress. It is against this backdrop that the White House indicates it may try other means in dealing with China. Perry expressed that intention vividly: “It takes two to tango,” meaning that engagement has to be a two-way street.

But it would be an oversimplification to claim that China doesn’t have any respect for the rules of the game or that it deliberately ignores Washington’s signals. Although some officials in Beijing contend that China should lean more toward Europe in its foreign policy, Chinese leaders who grapple with economic reform understand the significance of relations with the United States and are continually expanding ties with the White House. The reason for Beijing’s lack of response, so far, is that in the past, paramount leaders such as Mao Tse-tung or Deng Xiaoping were able to direct dialogues with Washington, while none of today’s Chinese leaders has a comparable authority to “tango.”

Beijing leaders are locked in a heated power struggle to succeed the 92-year-old Deng. Any soft stand on Taiwan, human rights, trade and security issues would cost them the support of the military and jeopardize their bid for power. This struggle has reached a critical juncture. Evidence shows that one sector of the Chinese government frequently fights another, with Beijing no longer enjoying the respect of its own officials. Even Chinese sources admit that the arms sales to Pakistan are conducted by a few military officers acting on their own--a sure sign of defiance toward traditional party authorities. If true, the real issue becomes not how to punish Beijing for its “irrational behaviors” but how to find a way to deal with a regime facing growing internal turmoil. Unfortunately, it is precisely on this question that the White House has little leverage, and therein lies its dilemma.

Punishing China by imposing economic sanctions, no matter how tempting this may appear, would harm U.S. interests and may not even work. With the world’s largest population and fastest-growing economy, China represents an enormously attractive business opportunity. For example, Boeing estimates that China will buy as much as $100 billion worth of commercial aircraft in the next few decades. Losing such a market would not only cut Boeing’s or McDonnell Douglas’ profits; it would also cost thousands of manufacturing jobs from Seattle to Los Angeles.

Sanctions against China may also hurt farmers in the Midwest. In recent years, China has become the world’s largest grain importer. It alone bought 4 million tons of corn on the world market last year and may annually buy as many as 6 million tons of grain by the end of the century. Such purchases will surely help raise grain prices. Should Washington place a trade embargo on Beijing, it would only hand the China market to Western Europe and Japan, because in the post-Cold War era, ideology no longer matters; nations tend to make decisions based on their own economic needs.

Furthermore, punishing China is tricky. In today’s global economy, business interests cut across national boundaries. China’s economy has been interwoven with and integrated into the world community. Most of its export-oriented businesses are joint ventures set up with overseas investors, especially from Taiwan, Hong Kong and other parts of Asia. This situation adds a new problem to any policy employing sanctions, since it would cause damage to such U.S. allies as Taiwan and South Korea. According to Tsung Chi, an expert on Taiwan, it is the China market that keeps Taiwan’s foreign trade in balance and its people in jobs. In 1994, Taiwan’s trade surplus with China reached $12 billion. Without exports to China, Taiwan would have racked up a $5-billion trade deficit that year. This is certainly a significant number for an island state.

Put another way, although China has a trade surplus with the United States, it is largely businessmen from other countries who reap the profits. Imposing economic sanctions on China is thus a two-edged weapon that may cause tensions between Washington and its friends.

That Washington is in a tug of war with itself over China is not new. Throughout American history, evangelism and trade were always the two interrelated yet conflicting parts of U.S. China policy. While missionaries worked hard to save Chinese souls, trade merchants toiled to make profits. For better or worse, however, it was business interests that often prevailed in Washington’s decisions concerning China.

Washington’s “open door” policy, formulated at the turn of the century, is a case in point. Although its designers had missionary conquest on their minds, it was their objective to keep China’s door open for American businessmen, and to prevent Europeans from dominating the China market, that shaped the doctrine and made it one of the few foreign policies that ever won bipartisan support. This legacy adds an element of challenge to the administration’s China policy: how to keep China’s market open for U.S. businesses while avoiding the impression that trade interests outweigh all other considerations.

Although there seems no ready solution to this dilemma--it will take time and patience to set U.S.-China relations back on track--a more “surgical” policy could be effective. Washington should only punish those sectors of the Chinese government that violate bilateral agreements. More broadly, a policy of “comprehensive engagement” could help resolve the China dilemma. Such a policy would allow the White House to expand ties with not only the Chinese central government but also with regional authorities, especially those in regions that have stakes in a continuing relationship with the United States and benefit from playing according to the rules of the international community. In this way, regional leaders, who have been a constructive force in China’s economic reform, could play a more positive role in Beijing’s decision-making.

A healthy relationship between the United States and China serves not only the interests of the two countries but also that of other nations. But while it takes two to tango, it needs many to form a choir. In this sense, a policy of comprehensive engagement might be a new solution to an old problem.