Review: ’A Contest for Supremacy’ by Aaron Friedberg

In the spring of 2010, after years of relative quiet in the South China Sea —the strategic body of water separating southeastern China from Southeast Asia, and including regions disputed by at least five claimants including China, Vietnam and the Philippines, tensions suddenly seemed to explode. Beijing announced that the Sea was a “core interest,” putting it in the highest pantheon of Chinese policy issues, alongside Tibet and Taiwan, on which China brooks no interference; China also increasingly pushed its claim that it controlled the territorial waters of nearly the entire South China Sea. It had warned other countries not to explore for oil and gas in the Sea, and had warned Western multinationals as well. Chinese ships would cut the lines of other countries’ fishing vessels operating in the Sea, while nationalist Chinese publications warned that other countries claiming even tiny portions of the water would lead to war. Pressed by Southeast Asian nations to help them respond to China’s actions, the Obama administration increasingly inserted itself into disputes over the Sea.

At a meeting of the Association of Southeast Asian Nations (ASEAN), Secretary of State Hillary Clinton announced that freedom of navigation in the South China Sea was an American “national interest,” and that the United States would support only resolutions of disputes on the Sea in a multinational forum approved by all sides. Chinese foreign minister Yang Jiechi erupted at Clinton, and in private the Chinese officials were reportedly even angrier at Southeast Asian counterparts for bringing the United States directly into the dispute. Yang suddenly got up and exited the ASEAN meeting, according to several reports, leaving the room in an uncomfortable silence. One hour later, he stormed back in, and quickly launched into an angry, thirty-minute-long monologue, nearly screaming at the other participants.

Although China and the Southeast Asian claimants to the Sea had never worked out their overlapping claims, the fact that Beijing now was putting pressure on other countries to bend to its will, after years of leaving the dispute fallow, seemed to indicate that Beijing was stepping into a role as an increasingly aggressive power. The United States, Europe, and Japan had been battered by the global economic slowdown, which had barely touched China —it grew by over 7 percent annually in 2008 and 2009 — and China has regularly been boosting its annual military spending by over 10 percent even as the Pentagon became bogged down in Afghanistan and the Middle East. A younger generation of Chinese leaders, who had known little of the poverty and weakness of the worst periods of Mao’s rule, now were in charge of the country, and the Chinese print and Internet media increasingly seemed to reflect a highly nationalist view of the world among Chinese opinion leaders. Though Deng Xiaoping, the architect of China’s reform era, had once counseled Chinese leaders to bide their time and play a low-key role in foreign affairs, that period seemed to have ended. But what would an end to China’s regional and global reticence mean —for other Asian nations, for the United States, and for the world?

Aaron Friedberg is certainly one who believes that China’s time of waiting is over, and that China’s rise has an increasingly dark, zero-sum hue. In his often compelling and sober new book A Contest for Supremacy, Friedberg, a leading conservative intellectual currently housed at Princeton, portrays the United States and China as almost fated to wind up in conflict, and Beijing as already lapping Washington in preparing for such a fight. “Looking across all the various domains of the Sino-American competition … Washington is going to find itself on the wrong end of an increasingly unfavorable balance of military power in Asia,” he writes in one such ominous warning.

Friedberg’s views matter, and not only because he is a serious, if sometimes hyperbolic thinker. He is also one of the cores of Mitt Romney’s foreign policy brain trust, which is split, like the George W. Bush administration, between hardliners on China like Friedberg and more moderate China strategists, who mostly advise a continuation of an American policy of dialogue, trade, and cooperation toward China that has been a hallmark of GOP and Democratic administrations going back to George H.W. Bush. The GOP base, meanwhile, is becoming more evangelical, blue collar, and white, suggesting that it will also become more skeptical of the American relationship with a China (a relationship that has never been very popular with the U.S. public) that represses religious freedom and forces abortions, and carries a huge trade surplus with the United States. And if the hawks within Romney’s camp triumph on China, we should expect to see a scenario something like the very early months of the George W. Bush administration, when the White House, not yet preoccupied with Al Qaeda and Iraq, vocally backed human rights in China, embraced pro-independence Taiwanese politicians, upped the rhetorical ante with China, and planned to sell cutting-edge weapons to Taipei. The result was an elevated profile for rights advocates —but also, before the terrorist attacks, a badly deteriorating relationship with the world’s rising power.

Friedberg’s book is both a compact history of U.S. policy toward China since the Second World War and a jeremiad urging American policymakers to wake up and shift their approach. Though smooth and well-written, the history is mostly bland, well-known and summarized, yet takes up several chapters; the jeremiad is thought-provoking, sober, and in some parts highly instructive to policymakers, and together the two parts of the book fit awkwardly.

As Friedberg explains, China policy has changed little since the early 1990s, when Bill Clinton, after decrying the “butchers of Beijing” for their Tiananmen crackdown as a presidential candidate, advocated giving Most Favored Nation trading status to Beijing because trade would not only enrich both countries but also help liberalize China economically and politically. Over time, the argument went, with greater interaction China would become enmeshed in the global system, dependent on other countries, more open at home, and a responsible part of the international community. China indeed was granted Most Favored Nation status, and ultimately joined the World Trade Organization, and its coastal areas have emerged into the manufacturing and supply chain hub of the entire world, with many products sourced only in China. After the first few months of the George W. Bush administration, the Bush White House, which established a regular high-level dialogue with China, echoed these policies and claims to an always more skeptical Congress, which from the beginning of Nixon’s opening to China struck a position more favorable toward Taiwan and skeptical of Beijing’s interest in changing. (The office of Vice President Dick Cheney, where Friedberg worked for a time, was a notable outlier to this policy consensus.) The Obama administration, even more realist than Bush or Clinton, pursued the same themes, with Deputy Secretary of State James Steinberg, a longtime China hand not known for sympathies toward Taiwan, calling for a U.S.-China policy of “strategic reassurance” toward one another —a formulation that echoed the Bush administration’s promotion of Beijing as a “responsible stakeholder” in the world. In a recent New York Times article, senior administration officials are quoted noting that they have seen a much more responsive Chinese attitude to many major world crises, including Iran and North Korea —statements almost identical to those issued by Bush officials about China’s cooperation in dealing with Pyongyang or Tehran. Some conservatives, picking up on the Obama administration’s more muted approach toward human rights in China, such as postponing an initial meeting with the Dalai Lama, accused the White House of giving up on pressure and instead essentially accepting that, over the long run, China will remain an authoritarian state.

In fact, Friedberg argues, most of the China policy community in Washington, which he mocks as the “Shanghai Coalition,” has signed onto this consensus of how to treat Beijing —with engagement. He makes it sound like to dissent from this consensus would result in horrific shunning, though in reality not only many members of Congress but also plenty of China specialists at both conservative and liberal think tanks, advocacy groups, unions, corporations, and publications are wary of the impacts of thirty years of engagement. Even Romney himself, on the campaign trail, though normally used to focusing on the minutiae of business and wonkish speeches on taxes, has taken time to blast China for its alleged currency manipulation and other unfair trading policies.

Still, Friedberg is making an important point, albeit one made even more pointedly several years ago by longtime Asia journalist James Mann in his short book The China Fantasy: Over thirty years, China has gotten much richer, to the point that it is now the world’s second largest economy, but hardly more liberal politically, yet policymakers continue to promise this link.

Actually, as both MIT China specialist Yasheng Huang and Claremont McKenna College China expert Minxin Pei have shown, the Party embraced its most progressive reforms in the early period of the 1980s (at least until the current intra-Party debate after the purging of Bo Xilai). The administration of Hu Jintao, who is due to step down shortly, has produced few real reforms, though premier Wen Jiabao has staked out a liberal position in public. Policies toward restive ethnic minority areas like Xinjiang and Tibet have regressed to where they were decades ago, with a much larger security force presence, greater restrictions on personal freedoms, and even attempts to cut off phone and Internet service to these provinces for long periods of time. At the same time, in recent years China’s government has retaken control over some of the most important sectors of the economy, though it will never again have the total control it did —disastrously— during Mao’s time. Beijing-based banker Carl Walter estimates that three-quarters of the biggest Chinese firms now are controlled by the government, up from about half ten years ago. This model of state-directed capitalism has looked, to many other nations, increasingly attractive at a time when the model of Western liberal capitalism seems to be failing across Europe and North America. And while a decade ago Chinese officials and academics were extremely shy about promoting China’s economic successes as a model for anyone else, now they increasingly talk of a China model of state-directed capitalism that could be useful for other developing nations. Even John Williamson, the economist who coined the term “Washington Consensus” now has written a prominent article entitled “Is the Beijing Consensus Now Dominant?” China has begun to more emphatically promote its development model, and it now hosts some 15,000 foreign officials annually, who come to study China’s economic model and economic planning. Several Chinese outlets called the 2010 World Expo in Shanghai, for which China reportedly spent some $60 billion, a platform to advertise its development successes to other countries.

But unlike Mann and others who have shown that China’s leaders do not seem to be getting more liberal and that policymakers in the White House appear to be ignoring this fact, Friedberg also argues that China is tipping the regional, and possibly global, security balance of power against the United States, with possibly disastrous consequences. The United States and China are engaged in a contest that “we are on track to lose,” Friedberg warns.  China, he argues, can continue to drastically expand its defense spending without doing any serious damage to its budget or its economy, because of its persistently high growth rates and enormous piles of cash. The United States cannot continue to boost its defense spending, at least not while Washington has no strategy for dealing with entitlements and an aging population, and while U.S. personal consumption soars and savings lag. Meanwhile, Friedberg argues, after getting little results advocating for human rights in China, successive U.S. administrations have increasingly downplayed rights, reducing ideological competition between the two powers and lessening pressure on the Communist Party. He further contends that, over time, since China is the largest country in East Asia, it will naturally draw other nations into its orbit, and they will essentially forced to accede to its primacy, allowing China to increasingly exclude the United States from Asia’s economic and political institutions. Most important, and most worryingly, he argues that China is moving ahead of the United States in cyberwarfare, allowing it to increasingly penetrate American companies and government institutions, and that China also is upgrading its missile systems so effectively that it will blunt the United States’ ability to project power in many parts of Asia. These new systems include medium-range ballistic missiles, land-based ballistic missiles, and others that in the near future could easily strike American allies and American bases throughout Asia. These missiles, as well as China’s more sophisticated navy, would theoretically in the event of conflict in Asia deny American forces access to critical parts of the region, leaving American partners and allies alone and facing Beijing.

This is a much tougher argument to make, though one certainly worth considering rather than ignoring the history of emerging powers —early twentieth century Germany, Japan— ultimately coming into conflict with established powers, or ignoring the possibility that China could continue to pursues capitalism without democracy. Some evidence, like the South China Sea dispute, does indeed suggest that China’s leaders have decided to adopt a more forceful, aggressive foreign policy than at any time since Mao’s era. But is China really gaining on the United States strategically and militarily? And is the White House really ignoring any gains by China? The answer to both questions seems to be no.

China’s military budget is increasing, and its technology is improving, but so is that of the United States, as well as of America’s allies, and there are plenty of skeptics of China in the Obama White House as well, including Secretary of State Hillary Clinton. In Asia, which Friedberg focuses on, China in recent years actually has alienated many of its potential allies, leading to countries that once shunned the United States embracing Washington’s power projection, which the Obama White House has taken advantage of. In the mid-2000s, with the Bush administration unpopular and China adopting relatively weak policies in Asia, Chinese leaders’ popularity soared, countries like South Korea and the Philippines embraced closer strategic ties with Beijing, and the United States seemed increasingly cut out of the region’s emerging institutional architecture. No longer. The fracas over the South China Sea, China’s jostling with India over South Asia, and Beijing’s increasingly confrontational stances with Japan clearly have scared many nations in Asia, which fear a great power on their doorstep more than one far away, and which have come to trust the (relative) transparency and stability of American policymakers. The Obama administration has shifted away from Bush’s overall ignorance of Asia to reinvigorate America’s ties with its treaty allies and other partners in the region, and to clearly place more American troops and naval assets in the region. Despite its supposed fraternal communist links with China, Vietnam now has become one of America’s closest partners in Asia, working with the United States on nuclear cooperation, joint port calls, defense dialogues, and training. South Korea, where just a few years ago many people called for the end of the American military presence, has built, during the Lee Myung-bak administration, what some Obama officials call the tightest relationship with the White House. Australia now has decided to host a permanent contingent of Marines in Darwin, a city in its north, while the Philippines, which drove the U.S. out of bases in the archipelago in the early 1990s, now has all but begged U.S. forces to return, at least on a rotating basis; the United States scheduled the most recent joint exercises with Manila right near the Philippines’ South China Sea territorial waters, an obvious signal to China. For the past two years, senior Filipino national security advisors have been traveling to Washington to ask Pentagon, NSC, and State officials to sell the Philippines more modern naval and aircraft weaponry, and the United States has responded to these overtures warmly. Overall, reports the Stockholm Peace Research Institute, nations in Southeast Asia have boosted their arms spending by more than 50 percent over the past five years, another sign of their growing concern about their large neighbor. Even Myanmar, for fifty years an international pariah and long dominated by China, seems to have shifted, with its leaders becoming increasingly worried about turning into a Chinese client state, and thus embracing some reforms in part to attract Western aid, investment, and relations. U.S. friends like Singapore, Australia, Vietnam, South Korea, India, and others also are increasingly building their own bilateral strategic ties, creating almost a ring of powerful, U.S.-friendly nations around Beijing. The United States also continues to have control of the most important lanes for shipment of energy, such as the Malacca Straits, and overall has a much more reliable mixture of domestic and foreign sources of energy than does China.

Overall, the United States actually is in its strongest position in South and East Asia in years, if not decades. China’s fears of modern-day “containment” by American allies actually seem more realistic than Friedberg’s fears that China will soon dominate the strategic environment in Asia. The Obama administration, meanwhile, has adopted many of the hard-headed measures Friedberg suggests to shift the regional balance of power back in the United States’ favor, including aggressively courting once-pariah nations, expanding the reach of naval and Marine forces, interceding in the South China Sea dispute, and developing counters to China’s missile technologies.

What’s more, China’s economy is slowing, well before it has reached developed nation status, while its population is aging rapidly. It may soon be the first country to have a large elderly population —due in part to the One Child Policy— without getting rich first, and its social welfare net could be totally shredded, while its labor costs will soar, leaving it in a difficult bind. Though it does right now have the cash to continue upgrading its military, this too is by no means assured, given its looming economic problems. Meanwhile, the Chinese state’s retaking of control of many sectors of the economy also has angered even middle-class and elite capitalists in China, who worry that their private companies are going to be unable to compete with the state behemoths and their political connections and easy loans. True private companies in China are having trouble getting credit, since the state-controlled banks can always make more money and political connections by lending to state-owned enterprises. The country’s stock and bond markets, necessary to fuel real sustained growth, remain underdeveloped, since the state still dominates them.  What’s more, state companies spend their profits on politically-approved projects, such as infrastructure projects, that often have low returns and are essentially a waste of money. As Beijing-based finance expert Carl Walter notes, “China’s banks operate within a comfortable cocoon woven by the Party and produce vast, artificially induced, profits that redound handsomely to the same Party.” Indeed, one study by economists at the University of Bari in Italy and BBVA bank group found that while state-owned enterprises only contribute about 25 percent to China’s economy, they get roughly 65 percent of all Chinese bank loans. By funding poorly-performing state enterprises, Chinese banks actually are taking money from Chinese savers, and transferring it, in the form of unnecessarily cheap capital, to enterprises that do not perform well enough to deserve these loans.  At the same time, the United States will remain, despite all its problems, vastly more wealthy than China for well over the long-term horizon, and if China is brought low by these serious economic hurdles, it may never catch up to the United States, as many other middle income countries have failed before it.