After a rough start to the year, last week's U.S.-China Strategic and Economic Dialogue -- the mammoth biannual consultation led by Secretaries Hillary Clinton and Timothy Geithner -- capped off a three-month period that has returned the Sino-U.S. relationship to a state of fragile equilibrium. Strategic mistrust remains pervasive, as the continued breakdown in military ties demonstrates, and there are few issues on which the two sides genuinely see eye-to-eye. But the missteps of 2009 provided some important lessons for better management of future differences.
It is clear that China has no inclination to take on greater responsibility for maintaining the global order. Quite the opposite -- Beijing feels better able to resist international pressure than it has in the past, sees calls for China to take up new burdens as a "trap," and intends to use its strengthened position to focus more intently on domestic policy. Nevertheless, the Chinese leadership has shown no stomach for a full-on fight with the United States. In the face of a toughened U.S. stance in 2010, Beijing blinked first. This reflects both successful diplomacy from the Obama administration and a China that is more realistic about the scope of its newfound power.
But while Beijing reaffirmed the importance of the U.S.-China relationship, there is only so much that can be delivered through bilateral bargains. With international unease over Beijing's assertiveness growing, the moment is still ripe for Washington to build a China policy that is more global in scope, more resilient to future shifts in the balance of power, and more effective in exerting pressure across a wider range of issues.
Last year saw China emerge from the global financial crisis emboldened but lacking a well-calibrated sense of the limits of its strength. Some of the conciliatory gestures made by the Obama administration encouraged a more inflated sense in Beijing of China's power -- and U.S. dependency -- than was borne out by reality. This translated into an openly uncooperative Chinese stance on major policy areas and a brash diplomatic manner. The Copenhagen climate summit saw its apogee, but it was far from an exception.
The reality check came at the beginning of the year, with an announcement of U.S. arms sales to Taiwan, a presidential meeting with the Dalai Lama, and rumors of a looming Treasury citation for currency manipulation. After some initial rhetorical bluster -- including threats to sanction U.S. companies -- China's leadership "looked into the abyss," as one American official put it, and decided to pull back. A March trip from Deputy Secretary of State James Steinberg and NSC Senior Asia Director Jeffrey Bader paved the way for a carefully choreographed mutual de-escalation before Chinese President Hu Jintao's visit to Washington for the nuclear security summit.
Crucially, while the moves on the U.S. part were mostly about atmospherics, China's were on substance. The most significant has been on Iran, where Beijing's agreement to a new round of sanctions has so far held through the Brazil-Turkey fuel announcement -- described by Chinese analysts as "the perfect excuse" to pull back. Instead, China has moved closer to final sign-off, last week producing its list of Iranian companies for targeting in the draft UN Security Council resolution. Chinese signals on currency revaluation have become consistently positive, even if the euro crisis has derailed progress before the upcoming G20 meeting. And while China's response to North Korea's attack on a South Korean destroyer in late March has been painfully slow, leadership advisors suggest that China will -- at the very least -- not block a UN Security Council condemnation of Pyongyang.
The limits to Chinese flexibility are apparent. China has been willing to take modest steps in areas subject to the toughest U.S.-China bargaining -- what the Chinese call "U.S. core interests" -- but little beyond that. This is not "responsible stakeholder" territory. On Iran, China has acted under pressure, not conviction. Progress in cooperation with China on issues such as Afghanistan and Pakistan has been virtually nil. Yet alarm over Beijing's assertive turn has created a propitious strategic environment for Washington to develop an approach to China that transcends the bilateral relationship and with the potential to shape Chinese choices on a larger set of concerns.
The list of disaffected countries is long. European leaders emerged with strongly negative views after China's behavior at Copenhagen -- and have seen no subsequent rapprochement. Future EU China policies will likely take on a tougher and more focused character. The same is true in China's neighborhood. Beijing has treated the opening provided by troubles in the U.S.-Japan alliance with complete indifference. South Korea has been insulted by China's approach to the Cheonan incident. Sino-Indian tensions have been left to fester. And Southeast Asian nations have grown anxious over Beijing's recalcitrant stance on territorial disputes in the South China Sea.
The opportunities this has afforded the United States in Asia itself have been obvious. China's inept handling of Pyongyang has helped tighten both the U.S.-South Korea and U.S.-Japan alliances, and the list of Southeast Asian states seeking deeper defense cooperation with Washington has grown. More novel have been recent U.S. efforts at coalition-building outside the region: the Gulf States and Israel joining the U.S.-EU press on China's Iran policy, and India and Brazil joining U.S. and European calls for currency revaluation. The scope to extend this approach across a range of economic and foreign policy issues is substantial.
This year, the Obama administration's firm stand on key U.S. interests, coupled with face-saving ways for Chinese leaders to portray to their public that they are acting of their own volition, has begun to deliver some clear successes. It has also restored a level of sanity to a relationship that was starting to lurch out of joint. But in the absence of a real convergence in views between Washington and Beijing, this approach will not be enough. U.S. China policy needs to move further outside the bilateral box.
