What Will Vice President Biden Find in China? Take Two

In her latest post, my colleague, Liz Economy, asks:  What will Vice President Biden find in China?  I thought I’d try out my own response to this very direct question:

1.  Biden will find a China whose rise depends on economic growth but whose growth model is no longer sustainable.

Bluntly put, China’s leaders know that their capital-intensive, export-oriented approach is delivering diminishing returns and threatens to become a major political vulnerability for the government. The global economic crisis provided clear evidence that China’s export-driven economy is vulnerable to dips in demand in the rest of the world. Meanwhile, its dependence on investment has introduced distortions and imbalances into the Chinese economy.

Why should this matter to Biden and the United States?

Washington has spent years urging China to “rebalance” its economy:  China produces much and consumes little, while the U.S. consumes much and wants to produce more (in part to sell to China). The bottom line is this: Beijing lacks the political stomach to undertake the toughest rebalancing steps (for instance, a rapid appreciation of the renminbi) but the good news is that, for self-interested reasons, its leaders are committed to rebalancing and will take some steps that are in the U.S. interest.  And ironically, it’s probably worth asking whether, from a Chinese perspective, the ongoing U.S. debt crisis may even create some additional incentives to reckon with China’s own imbalances. To use the pregnant phrase from a Reuters article this morning, could China now "reprice U.S. risk"?

2.  Biden will find a China whose social and political fabric is fraying.

A spate of headlines about truckers’ strikes and ethnic unrest shows just how brittle China’s polity is. China is beset by rural protest.  It has one umbrella labor federation but faces sporadic and unpredictable strikes. China’s leaders have been effective at blunting the political effects of this discontent through a combination of carrots and sticks. Still, the challenges are growing. (And if you need more evidence, see the angry public reaction to China’s recent high-speed rail crash).

Why should this matter to Biden and the United States?

Two reasons:  First, it means China’s leaders are preoccupied domestically and will be (mostly) uninterested in what the U.S. has to say. Second, it means China’s leaders will probably dismiss U.S. calls for political reform with even more than their usual vigor.

The regime is likely to meet challenges to its stability with an increasingly assertive mix of blandishments and force. Beijing (and local officials) will co-opt some demands of the discontented, not least by hiking wages and funding social housing (which, incidentally, may be marginally helpful in promoting economic rebalancing).  But they will also build, deploy, and ultimately use paramilitary and police capabilities while cracking down hard as incidents arise.

3.  Biden will find a China whose cautious leaders prefer incremental steps to bold action.

Beijing is facing this litany of development and social challenges against the backdrop of a cacophony of voices and views. Some voices represent entrenched domestic interests and are deeply invested in the status quo. For their part, as conservative technocrats, China’s leaders tend to split the difference between these competing groups. The result is a strong bias toward incremental policy change that should persist until China’s next leaders take office in 2012, and probably even beyond that. Here are two examples:  Chinese leaders broke the renminbi’s peg to the U.S. dollar in 2010 but have chosen to implement their decision incrementally. Similarly, China voted for new sanctions on Iran in the UN Security Council but offered assurances to insulate Chinese interests from the fallout with Tehran.

Why should this matter to Biden and the United States?

For one, it means domestic Chinese allies will be essential if the U.S. is to elicit cooperation from China. Foreign pressure generally only works to the extent that it aligns with the objectives of one or another of the interest groups Chinese leaders seek to balance. But perhaps more important, it also suggests that while China’s commitment to rebalancing is real, this process will move more deliberately than anyone in Washington would like. From Beijing’s vantage point, an uncertain global environment, combined with inflationary pressures and a leadership transition at home, dictate caution rather than boldness. And the kind of incrementalism that Chinese bureaucrats favor isn’t going to mesh with American expectations and exhortations.

4.  Biden will find a China that is being asked to assume global responsibilities but is (very) reluctant to do so.

To use my former boss, Bob Zoellick’s, famous phrase, China is a “stakeholder” at many of the top tables of international relations. It is a permanent member of the UN Security Council, a WTO member, and a signatory to protocols on everything from ozone depletion to chemical weapons. It is a member of the G20 (which has largely supplanted the G8) and has a seat on the Financial Stability Board. But China has proven itself to be a reluctant stakeholder, often content to continue taking a free ride on the provision of public goods by others.

Why should this matter to Biden and the United States?

In some areas, China will push back hard against steadily building international expectations that it match its new economic clout to tangible actions in concert with others. Often, China will continue to insist that, as a developing country with its own litany of challenges, it cannot be expected to shoulder "unreasonable" burdens.  And that will mean growing resentment of China, not least in the United States, as many argue that Beijing is punching below its weight. This, in turn, will feed a parallel process of resentment in Beijing, as some Chinese argue that the country is punching above its weight by supporting global growth and becoming a new demand driver in the face of a slowdown in the U.S. and austerity in Europe.

5. Biden will find a China where security hawks preen and posture.

Finally, here is something Biden should contemplate: For some in China’s strategic class, recent events have reinforced breathtaking conclusions about China’s “rise” and American “decline.” Many, both in and out of China’s government, want to test what Beijing’s growing weight might yield. They are confident of China’s growing strength. And they relish the opportunity to, at minimum, make Washington work harder for Chinese support of ostensibly shared objectives.

Why should this matter to Biden and the United States?

As I’ve blogged here on Asia Unbound before, the United States and China share more interests than, say, ten years ago (much less twenty or thirty years ago). But translating that common stake into complementary policies will remain elusive unless the two countries’ threat assessments begin to converge. And even when Beijing does share America’s sense of threat, countervailing interests too often obstruct cooperation. Combine that with other tensions in the relationship—not least in Asia, on everything from U.S. arms sales to Taiwan to the South China Sea—and the U.S. and China are likely to face a period of greater security tension.