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China Experts Assess Next Steps for U.S. Policy Toward Beijing

May 25, 2010 at 12:00 AM EST
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As the U.S. looks to relieve tensions with China in a series of high-level talks, Ray Suarez gets two points of view on the economic and foreign policy relationships between the two countries.
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RAY SUAREZ: And for more on that relationship, we turn to Kenneth Lieberthal, a senior fellow at the Brookings Institutions and former National Security Council staff official dealing with China in the Clinton administration, and Ted Fishman, a journalist, former trader, and adviser to companies operating in China. He’s the author of “China, Inc.: How the Rise of the Next Superpower Challenges America and the World.”

Kenneth Lieberthal, you saw it, an enormous American delegation, a fleet of 50 cars to haul them from place to place. When you see a meeting like this, can you conclude that, for America, this is the most important bilateral relation in the world?

KENNETH LIEBERTHAL, Brookings Institution: I think, effectively, it is. China next year will have the world’s second largest economy, behind only ours.

Whatever global issue you think of, whether it’s nuclear proliferation, touching on North Korea and on Iran, whether it’s global climate change, where China is the largest greenhouse gas emitter in the world, ahead only of us, or whether it’s the major economic issues of our day, the capacity of the U.S. and China to work reasonably well together is crucial to managing those problems reasonably effectively.

If we go at cross-purposes, those problems become much more difficult. So, yes, I would say we have a number of very important relations, but if there’s one that stands out, it’s our relationship with China.

RAY SUAREZ: Ted Fishman, do you agree?

TED FISHMAN, author, “China, Inc.: How the Rise of the Next Superpower Challenges America and the World”: Yes, China is one of the three or four relationships which is our most important relationship.

Of course, it changes over time. Sometimes, it’s the strong player that we have to pay the most attention to. And, sometimes, it’s faltering players we have to pay the most attention to. And the United States is in the position of dealing with both kinds right now.

China helps in some of those relationships, and it’s all but irrelevant in some others. In most of our wars right now, China is really not a factor, but those are still very important relationships, and also very important in the backdrop of how China sees its growing power vs. the struggles we have around the world.

RAY SUAREZ: Well, Ted, in the last two years, you have heard increasing reference to the G2, never mind the G8 and the G20, that, when it comes to issues large and small, Korea to global warming, it’s really the United States and China that are the players that make the game.

TED FISHMAN: Well, it’s true. They make the game, but they’re playing two very, very different games. The partnership is fundamentally good, far better than our historic relationships with China have ever been.

You know, there’s a tendency to see every snapshot of difficulty with China as a problem. But, if you look at the whole photo album, it’s getting better. And, yet, I think we’re at danger of highlighting the relationship too much, and not giving enough credit to the kind of partnership we can have with our other big partners: Japan, Western Europe, and the United States.

Sometimes, countries tend to think that their interests are more aligned with China than they are with the U.S., but, if you look fundamentally at the relationships between the U.S. and our traditional allies, it’s far more in our interest to work together and have that relationship with China than just the U.S.-China relationship on its own.

RAY SUAREZ: Ken Lieberthal, what do you think of that formulation, the G2, the two countries that really make things happen?

KENNETH LIEBERTHAL: I think, frankly, it’s a terrible formulation. It’s terrible for two reasons.

One is that it’s hard to think of a major global issue where the U.S. and China can simply drive the outcome by itself. So, I agree very much with what Ted just said, that we need our partners, to a greater or lesser extent, on almost every issue.

Secondly, to the extent that the U.S. and China talk about a G2, other countries will be less willing to cooperate with us on these issues, because no other country will accept easily the notion that the U.S. and China should decide the big issues largely on their own.

So, to be effective, we need to work well with the Chinese, and we absolutely need to work well with the other major players around the world.

RAY SUAREZ: Ken, when you make a splash like this in a bilateral conference, send a large delegation studded with top names in the administration, and come home with some assurances here, but nothing really nailed down, no progress on Korea, is it worth going? Should some of this stuff be done before anybody gets on a plane?

KENNETH LIEBERTHAL: Well, actually, a lot of it is done before anyone gets on a plane. The staffing for this kind of meeting is extraordinary.

Most of what you see come out of it is largely scripted. The kind of unexpected element here, clearly, was North Korea, where the situation has changed very rapidly even over the past week. I don’t think anyone expected major agreements publicly announced at the end of this conference.

This dialogue, unlike most U.S.-China meetings, is aimed at — fundamentally at deepening mutual understanding, periodically making sure that our relationship is moving in a more positive direction. And I think, I hope, at least, over time, it will lead to long-term efforts to get at issues like protectionism in China, management of the nuclear issue, better cooperation among clean energy and climate change, and so forth.

So, looking for what are called deliverables is not really the right measure for this particular dialogue, this strategic and economic dialogue.

RAY SUAREZ: Ted, Treasury Secretary Geithner was especially interested in opening up the Chinese market, after hearing some recent noises about China favoring domestic industries, also very interested in getting some accommodation on the currency exchange rate between the American dollar and the yuan.

Any progress? And why is it so important that these things get done?

TED FISHMAN: You know, I don’t think there was any progress.

This is the kind of discussion we have been hearing for a long time. What’s different right now is that American industry, particularly the large global multinationals that have bet so much on China to deliver them significant growth, are getting frustrated, because China really wants its domestic players to have a strong hand in China’s market.

China’s doing what it should for its country. It’s making its own domestic players as strong as they possibly can. That’s what we would do. On the currency front, China is giving the same kind of empty rhetoric it’s given for a long time, and playing its own game, also to its own advantage.

China is pegging to the U.S. dollar as a level lower than its market rate as part of China’s industrial strategy. It promotes China’s exports. It’s gotten China to where it is today. And they’re willing to talk somewhat nicely, but stick very much to their playbook, as they have.

RAY SUAREZ: And, finally, Kenneth Lieberthal, to Korea, in the very short time we have. Does the United States expect more than China’s willing to give in help to — to contain the North Koreans?

KENNETH LIEBERTHAL: I think we certainly want more than China is willing to give. China is very, very cautious about dealing with North Korea, cannot control it, is irritated by it constantly, but also is very, very uneasy about pushing the North Koreans hard.

We, on the other hand, want to see Chinese leadership, along with us and the South Koreans and the Japanese, to move this to a better place. And, so, I think that we’re going to have to do some hard work to get the Chinese to step up on this issue the way we think they should.

RAY SUAREZ: Kenneth Lieberthal, Ted Fishman, gentlemen, thank you both.

TED FISHMAN: Thank you.

KENNETH LIEBERTHAL: My pleasure.