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U.S., China Explore Deeper Ties as Partners, Contenders

November 16, 2009 at 12:00 AM EDT
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Jim Lehrer speaks with a panel of China experts about the political and economic implications of U.S.-China relations.

JIM LEHRER: That follows take two on China, a big-picture — big-picture look at its relationship with the United States.

That comes from James Fallows of Atlantic magazine, who recently returned from living in China, Minxin Pei, a professor of government at Claremont McKenna College in California. He’s been analyzing China for us at the NewsHour since the days of Tiananmen Square. And Niall Ferguson, an author and professor of government at Harvard University — his most recent book is “The Ascent of Money.”

Jim Fallows first.

Should China be seen as a friend or an enemy of the United States?

JAMES FALLOWS: Well, probably neither of those directly. It’s both an important partner for the U.S. in countless ways.

We — as we heard President Obama saying, on climate issues and environmental issues, if the China and U.S. don’t work together, it really is going to be difficult for anybody else to do anything. During the financial crisis, it was crucial for China to work with Western countries as well.

But there are differences of political values and perhaps strategic interests. So, it is a partner and also, you know, a contender in various ways. And I think the challenge over the last 30 years and for years to come is to keep both of those aspects in mind at the same time.

JIM LEHRER: Mr. Pei, would you agree with Jim Fallows, a contender and a partner?

MINXIN PEI, Claremont McKenna College: Oh, Yes, but — except I would the word “limited” before partner, because China can be a partner, but China has its own interests.

And it is not going to let the U.S. dictate what China’s interests are. As a result, if you look at where China — what China is doing, where China can be helpful, China always puts its own national interests ahead of American concerns.

So, the U.S. can be disappointed if it places too much hope on China being helpful.

JIM LEHRER: Professor Ferguson, how would — what terms would you use?

NIALL FERGUSON, author, “The Ascent of Money”: Well, I rather like the word “frenemy,” because…

JIM LEHRER: Frenemy?

'Banker to the United States'

Niall Ferguson
Author, The Ascent of Money
There is a dimension of friendship and a there's a dimension of rivalry in this relationship.

NIALL FERGUSON: ... there is a dimension of friendship and a there's a dimension of rivalry in this relationship.

I have talked about "Chimerica as a single economy," China plus America, really the key driver to the expansion of the decade from '98 to 2007, and still, in very many ways, the key to the way that the global economy works today, with the Chinese exporting, the U.S. importing, a huge trade deficit between the United States and China, and -- and China intervening in international currency markets in order to keep its own currency weak, but thereby financing at least a part of the U.S. deficit.

China has become the banker to the United States. And its policy of reserve accumulation has -- as provided nearly $2 trillion worth of effectively cheap, or if not free, credit to the United States. So, this is a very -- this is a very paradoxical relationship.

And I would liken it perhaps to a marriage that was once happy, but is now approaching a rather rocky period, if not divorce.

JIM LEHRER: Rocky period, or -- if not a divorce, Jim Fallows?

JAMES FALLOWS: I think, divorce, you can imagine that only in some extreme circumstances, for example, a disagreement over Taiwan, which remains a contentious issue, or some other sort of deus ex machina of a real kind of political shock.

I think, otherwise, there are, you know, real imbalances to be worked out. But, as -- as we have heard, over the last decade, China has geared its economy to create as many jobs as it could, even though that meant sending about half of the entire worth of its production overseas in loans to the U.S. and other places.

And, clearly, the imbalance for China in the distortion of its economy and the U.S., in having such a reliance on consumption and debt, each of them has to -- has to be worked out.

I think, Professor Pei, I agree that China will pursue its own interests first. That is probably true of every great power. And, so, the trick with the U.S. and China is to have an understanding that each of them will have its own interests paramount, finding ways to move more in common directions than opposing directions. And I do think that is possible.

JIM LEHRER: Professor Pei, how do you think President Obama's words today about universal rights, the excerpt that we just saw from what the -- what the president said in Shanghai to that group of students, how do you think that is going to go down with the leadership of China?

MINXIN PEI: Well, it's going to go down well. But I think President Obama has struck the right tone.

He has affirmed American values, without being too confrontational. Of course, the Chinese government does not react positively or comfortably with that kind of assertion publicly. That is why, perhaps, they did not allow him to have a televised town hall meeting in Shanghai today.

JIM LEHRER: So, is that just kind of a given, Professor Pei, that there's always going to be this difference of opinion, a serious difference of opinion, about those kinds of issues, and put them aside and move on to the other things, like economics and climate change and all the others?

MINXIN PEI: No, I think these issues, differences in values actually matter. When you look at U.S.-China relationship, you will find this anomaly. Both countries have overlapping interests in many, many areas, but both countries lack strategic or fundamental political trust.

And, if you don't have trust, you cannot actually move on these important issues.

JIM LEHRER: Yes, go ahead. I'm sorry.

MINXIN PEI: No, no, I'm done.

JIM LEHRER: You -- you agree with that, Professor Ferguson; there has got to be trust, or this isn't going to work?

Generating Chinese cooperation

James Fallows
Atlantic Magazine
We do see ways in which, potentially, China can be part of the solution, rather than the problem, in Iran and North Korea and other places, certainly on the environment.

NIALL FERGUSON: Well, I have to say that I think President Obama's foreign policy currently consists of making highfalutin speeches around the world, from Cairo to Shanghai.

I think he has got his priorities wrong here. There are two very important items that should be right at the top of the Chinese-American agenda. Number one is getting the Chinese to end this crazy policy where their currency is pegged to ours, and, when the dollar weakens, so does their currency, at a time when it should clearly be strengthening, not weakening.

And number two is to get the Chinese to line up in a meaningful way on Iran. Now, if he is going to make speeches about human rights that he must know the Chinese will simply dismiss out of hand, I think he is wasting valuable time on what is really one of the most important diplomatic initiatives of this presidency.

JIM LEHRER: You don't think there is any way, Professor Ferguson, that China will ever go along on Iran and some of these other, like Tibet -- and some of these other issues that Jim Fallows also mentioned, Tibet, the Dalai Lama, North Korea, you go down through the list?

NIALL FERGUSON: Well, I think Iran is the most important of these issues right now, because it's highly unstable situation in Tehran.

There are clearly elements within the regime that are pressing ahead with their nuclear arms program. And the critical thing is to line up a meaningful international coalition against this, to make the sanctions actually bite.

President Obama got somewhere with the Russians. But he's going to get very -- very much less far with the Chinese if he presses these kinds of domestic political questions...


NIALL FERGUSON: ... because that is not what the Chinese are interested in hearing about. And I think that is just looking for trouble.

JIM LEHRER: Looking for trouble, Jim Fallows, is that what the president is...

JAMES FALLOWS: I actually would see it a little bit differently.


JAMES FALLOWS: I was struck, in fact, by the continuity between President Obama's speech and what President -- the most recent President Bush had said, and President Clinton before him, in that, for -- through most of the time of the U.S.-China opening of the past 30 years, American presidents have emphasized the areas for potential cooperation, largely economic, also strategic.

We do see ways in which, potentially, China can be part of the solution, rather than the problem, in Iran and North Korea and other places, certainly on the environment. But every U.S. president has made clear there are areas where we disagree.

After President George W. Bush's last visit to China, he gave a big speech in Bangkok just before arrival about the importance of liberty, religious freedom, et cetera. So, I thought President Obama was in continuity of his several predecessors in showing the United States stands for certain political values. We will state those things, and, yet, we are also looking for areas of cooperation, economic and strategic, with China.

JIM LEHRER: Professor Pei...

NIALL FERGUSON: I think it is better to give those speeches in Bangkok, myself, rather than in China itself.

JAMES FALLOWS: The Bush administration made various pronouncements in China, too. So, the point is, this is very much like what we have heard from American presidents over the last 25 years.

Military concerns

Minxin Pei
Claremont McKenna College
China's military modernization has aroused a lot of suspicion and concerns, not just in the U.S. military, but around China's -- among China's neighbors.

JIM LEHRER: Professor Pei, let's move to the military part of -- the strength -- the growing strength of China. Is that -- should it be seen as a potential military threat, not just to -- not to the United States, per se, but to U.S. interests in that part of the world?

MINXIN PEI: Well, China's military modernization has aroused a lot of suspicion and concerns, not just in the U.S. military, but around China's -- among China's neighbors.

So, if you talk about a potential threat, it is certainly a potential threat to Chinese neighbors, like Japan, India, Taiwan, and Southeast Asia. But the problem with China's military modernization is not the speed or the scope of its modernization, but its transparency and China's strategic intentions.

What will China do with its increased capabilities? And that's an area, probably, President Obama will touch upon on his visit.

JIM LEHRER: What is your view of that, Professor Pei? Do you believe that the -- that the Chinese leadership is interested in fooling around in other -- other countries militarily, if it gets the strength to do so?

MINXIN PEI: No. I -- I think the Chinese leadership is very domestically focused.

And one of the lessons they have learned from the Soviet collapse is imperial overreach. And they believe that the Soviet Union collapsed because it spent too much on the military, and yet supported rogue regimes around the world, to its own cost, and, then finally, that the Soviet Union had too many military commitments around.

So, I do not believe, in the foreseeable future, China would like to its expand its military footprint around the world.

JIM LEHRER: Professor Ferguson, how do you see that?

NIALL FERGUSON: I think the difference between our situation today and any previous period since the openings of China in the early 1970s is that, because of the financial crisis, China's economics...

JIM LEHRER: No, I mean on the military. I'm sorry. I mean on the military.

NIALL FERGUSON: But bear in mind that the economics are crucial here.


NIALL FERGUSON: For the first time in over 100 years, China's economy is -- is likely to become the same size as the United States' within -- well, it could be in the 2020s.

They are now embarking on a major expansion of their naval capabilities, beginning with submarines and probably moving on to aircraft carriers. That means, by the 2020s, China will no longer be just a frenemy, to use that rather unfortunate word.


NIALL FERGUSON: It will be clearly a strategic rival in Asia-Pacific and perhaps further afield.

China's next generation

Niall Ferguson
Author, The Ascent of Money
If the economic engine should falter, it will be very tempting for China to move on to a somewhat more aggressive foreign policy course.

JIM LEHRER: But do you think -- to the question that I raised with Professor Pei, do you believe there is an inclination on the part of the Chinese to -- to -- to tinker with other countries that -- more international things, using its military strength as it builds in the 2020s, as you say, or are they going to be more domestically oriented, the way Professor Pei believes it looks that way now?

NIALL FERGUSON: Well, this is clearly not something -- this is clearly not something that the present generation of Chinese leaders are thinking of doing.

But I think we have to look ahead a couple of decades and ask ourselves what the next generation of China's leaders will be doing, particularly as their country is bound to run into some serious internal problems, not least because of the huge social dislocation, as well as environmental dislocation, of their accelerated growth policy.

Now, my concern is that nationalism is really the thing that binds China together today. It's no longer ideology. And if the economic engine should falter, it will be very tempting for China to move on to a somewhat more aggressive foreign policy course.

But, as I said, this is not...


NIALL FERGUSON: ... something for today's leaders. It is something for the next generation.

JIM LEHRER: What do you -- what do you think about that, Jim Fallows?

JAMES FALLOWS: I think my impression is -- is closer to Professor Pei's.

And I think that is the general view of people with experience inside China, that -- that nationalism that is aroused in China is usually in response to some kind of perceived, you know, disrespect from the outside world.

And so much of the energy is on trying to develop the economy and keep the thing going for a while. So, I think that it is -- while anything is possible in the future, for the foreseeable future, for, you know, 10 or 15 or 20 years, military challenges are not the main thing we should be concerned about with China, with the exception of Taiwan. Taiwan...

JIM LEHRER: All right. We have lost -- we have lost -- no, there, you are back. You are back.

Thank you, Jim Fallows and Professors Pei and Ferguson. Thank you, all three, very much.

MINXIN PEI: Thank you.