Nothing so vexes strategic analysts, not only in Asia but all over the world, as the confusing nature of the relationship between the US and China.
The US is having a rough recession, but it is not only the biggest and strongest economy in the world, it is uniquely placed to remain so. It has a little over 300 million people now. By 2050 it will have 400 million people. That makes the US absolutely unique among Western nations, with its nearest analogue being Australia, but on so much smaller a scale that it doesn't really matter (except to us Australians). Meanwhile, China, with its 1.3 billion people, is continuing to sustain economic growth of near 10 per cent a year. It will be a long, long time before it catches up to the US, if ever, but it is the only nation in the world which could credibly challenge the US across a significant number of national power indicators.
What is especially hard to work out, though, is the long-term trend in the relationship. Too much attention is given to US policy towards China and not enough to Chinese policy towards the US. George W. Bush once said he thought China was a strategic competitor to the US. Later he worked very hard to engage China as a partner.
His then deputy secretary of state, Robert Zoellick, now the World Bank president and one of the smartest guys in Washington, said that Washington wanted China to be a "responsible stakeholder". By any normal measure the Obama administration has done everything it could possibly do to engage China positively and the Pentagon refers to Beijing as a "leading stakeholder".
And yet the peaceable, sweet tempered Barack Obama has mortally offended Beijing, by offering to sell $6 billion ($6.75bn) of arms to Taiwan, arms which had been approved long ago but whose sale had been held up by Taiwanese politics, and by meeting the Dalai Lama. Beijing decided to make a big fuss out of both of those issues. This was entirely Beijing's decision. Obama had refused an earlier meeting with the Dalai Lama, and his Secretary of State, Hillary Clinton, had gone soft on criticising Chinese human rights violations during her first visit to China.
So why did China decide to make such a fuss? It was a much bigger fuss than usual, with Beijing threatening trade sanctions against US companies involved in the arms sales to Taiwan, something it hasn't done before.
There is too little serious analysis of what Beijing is thinking and why, and what the different power groups are within the government.
Two recent documents are useful on this score, without being definitive.
One is the International Crisis Group's report, The Iran Nuclear Issue: The View from Beijing. The other is a report from the Rand Corporation, entitled A Question of Balance, Political Context and Military Aspects of the China-Taiwan Dispute.
Before coming to those reports, let me give you the net assessment first. I agree with those analysts who see China as having a divided strategic mind in relation to the US. The US makes China rich by buying so many of its exports. The US also keeps the peace in the Asia-Pacific, but this involves a big US military presence which China finds inhibiting, or potentially inhibiting, especially in relation to its freedom of action towards Taiwan.
So Beijing wants the US to keep making it rich, which means maintaining a certain level of amity in the relationship, and broadly it wants the Asia-Pacific to remain peaceful. However, it also wants US strategic influence to decline, especially in Asia, and it wants the prestige of the values that the US promotes, especially democracy and human rights, to decline also.
Without wishing to verbal the authors of either of the two reports I cite, I believe their analysis broadly supports this view.
The ICG report on Beijing's policy on Iran concludes that Beijing will try to weaken and delay any sanctions against Iran. It just doesn't take the Iranian nuclear threat seriously. The ICG authors don't judge this attitude on Beijing's part, but I think it shows at the very least Beijing's immaturity as a global power. It is not a responsible stakeholder in the global system if it's happy to let Iran go on and acquire nukes. The ICG authors describe how Chinese interlocutors simply want to avoid any Chinese responsibility for Iran. If Iran really is a problem, the Chinese argue, it's all America's fault and Beijing has no responsibility to fix it. China would not want to be isolated at the UN, and therefore may not veto sanctions, if it comes to that, but it will make sure sanctions are ineffective.
But the ICG report indicates many other fascinating aspects of Beijing's view of Iran. Beijing sees the Iran issue as part of its bilateral relationship with the US, and something it can use to obtain concessions from the US. This compares with Beijing's similar use of the North Korea issue. But the ICG makes clear that Beijing also supports Iran in principle, as a fellow dictatorship as it were.
The ICG report argues: "China's support for Iran's government is also linked with its worries about the `colour revolutions' in Eastern Europe and Central Asia. It has officially stated its preference for a `harmonious world' with a diversity of social and political systems and would consider the disappearance of Iran's conservative government a loss." In other words, Beijing would much rather see Iran ruled by the dictatorship of the mullahs, than by any system of democracy. The ICG report further notes: "The two countries (China and Iran) also share important historical and political affinities, shaped by suspicion towards the West and reinforced by an experience of sanctions and a perception of US interference in their domestic politics."
Moreover, the ICG argues that: "As noted, China and Iran share an interest in balancing American influence in the Middle East and Central Asia."
Thus Beijing doesn't really see anything which constitutes a global order, it merely sees American power which it automatically wants to cut down. This is even though China relies on the US Navy securing the sea lanes around the Persian Gulf for trade. The ICG describes the extensive economic integration between China and Iran. And here Iran has been a canny player, inviting Chinese companies into its energy sector in order to keep up Beijing's motivation to protect Iran.
This leads to two other important insights from the ICG. One is that China's huge state-owned energy companies are a powerful political factor within China itself. Another is that China has benefited enormously from Western sanctions against Iran. It has used the absence of Western companies to invest and trade in Iran virtually without competition.
Too much Western analysis of Beijing's position on Iran has focused exclusively on the energy question, whereas the ICG demonstrates convincingly that strategic and political considerations are also hugely important to Beijing. It wants to weaken or even neuter sanctions against Iran, and it wants to hurt the US strategically, but it wants to do so without provoking outright conflict with the US.
The Rand Corporation study on the China-Taiwan dispute offers a starker vision of Beijing's intentions and capabilities. It quotes a Pentagon publication to the effect that by the end of 2007 China had deployed 1000 short-range ballistic missiles to garrisons opposite Taiwan, and that this number was increasing by more than 100 missiles per year.
The Rand Corporation examines what the Chinese could do with these missiles and it doesn't make pretty reading. Beijing could, with these missiles, "cut every runway at Taiwan's half-dozen main fighter bases and destroy essentially all of the aircraft parked on ramps in the open at those installations".
This would allow Beijing to achieve air superiority to the extent that it could destroy the rest of the Taiwanese air force. Worse, "the missile threat to the US Air Force base at Kadena (in Japan) and the US Marine Corps base at Iwakuni on Okinawa poses the same kind of danger as that faced by Taiwan's air bases".
It's not all military doom for the US in this scenario. The Rand study proposes ways Taiwan could still defeat any amphibious invasion from China and makes the point that if Beijing understands that any attack on US air bases would result in massive retaliation, it would be less likely to mount such attacks. Naturally every sane person on the planet hopes that no such scenario ever comes to pass.
But the Chinese are not building these missiles idly. At the very least, and on the most benign possible interpretation, they are building these missiles in order to have the ability to intimidate, psychologically and politically, both Taiwan and the US in the event of any future Taiwan Straits crisis. The US Navy and Air Force are hardly idle themselves in the face of all this, and have more than a few tricks up their sleeve, although in this context the cancellation of the US program to build the F-22, the most advanced air superiority fighter the US has ever built, is worrying. But the prodigious Chinese program of arms aimed at Taiwan indicates something about China's strategic intentions. This is not that China is planning to go to war with the US, but that it is planning to compromise and degrade US strategic supremacy in the Asia-Pacific. That, certainly, is a long-term trend in the US-China relationship.
As these trends mature, it is unclear if the US will decide that continuing to make China rich is in its own national interests. The US-China relationship is going to become more complicated. Those many pro-China voices in the Australian debate, especially those at the Australian National University, have no answer to why accommodating China on all points, which seems to be their policy, would produce a good outcome for Australia.
