Sino-American Military Frictions

After the Taiwan-Strait crisis in 1995-1996, China accelerates to build up military forces; its air and navy forces have achieved remarkable expansion. Recently, the development of aircraft carriers, like the other significant military developments in China, once again attracts world’s attention, especially America’s vigilance. The potential threat posed by China’s military buildup can severely injure the U.S. interests in Asia-Pacific region.

 According to the U.S. Defense Department analysis, one of the significant goals of the PLA’s expansion is pursuing strategic interests beyond China’s territorial boundaries, to be specific, controlling the sea lanes to secure the access to oil and defending interests in South China Sea. Nowadays over 80 percent of China’s oil is transported from Africa and the Persian Gulf through sea lands. Thus, the sea lane which is from the South China Sea through the Strait Malacca, across India Ocean, to the Persian Gulf is a significant strategic interest to China. But the America’s naval activities in these seas which are also vital for American interests are challenging China.

China’s claims that it has the largest portion of territory in South China Sea - an area stretching hundreds of miles south and east from its most southerly province of Hainan lead to  hot dispute from Vietnam and the Philippines; these two countries also declare their sovereignty in South China Sea. China’s challenge in the South China Sea directly threatens America’s allies and freedom of the seas which is a non-negotiable interest of the United States. The U.S. is the world’s preeminent seafaring nation and half of global shipping and most of Northeast Asia’s energy supplies transit through South China Sea. At the same time, the America’s shared interests with Vietnam in safeguarding peace and security in the western Pacific and in balancing growing China’s regional clout are also challenged by China’s claims. Another crucial goal is to deter Taiwan from independence. China has deployed many advanced military systems towards Taiwan and had more than 1000 conventionally armed short-range ballistic missiles directly targeting Taiwan. According to an analysis conducted by AEI, China has already had the ability to complete an air war to Taiwan before the U.S. and Taiwan’s air forces fired a shot.

Territory of South China Sea that China claimed

The modernization and expansion of China’s military forces can weaken the U.S. and its allies’ defending capabilities. China has enough power projection to threaten the U.S. and allies’ defense deployment in the “first island chain” and “second island chain”. Besides, in terms of the strategic nuclear force, as Pentagon reported, China has improved its strategic missile force in quantity and quality which enhances China’s nuclear deterrence and strike ability.

China's Strategic "First Sea Chain" and "Second Sea Chain" to US

Based on the American interpretation of China’s military force buildup, the U.S. is trying to impede China from possessing military advantages in Asia-pacific region by developing the “Joint air-sea battle concept” which integrates all military domains to contain China’s military expansion. Moreover, the U.S. uses three “island chains”, from Japan to Diego Garcia, from Guam to Australia and from Hawaii to Alaska to weaken China’s nuclear projection.

America’s hard response and its "Back to Asia" actions alert China and influence China’s perspective of the current condition in Asia-Pacific region. In “National Defense White Paper 2010”, China explicated that the profound unfavorable modifications are taking forms in Asia-Pacific strategic landscape mainly due to America’s increasing reinforcement regional military alliances and involvement in Asia security affairs; considering its own interests, even though China is pursing to build mutual trust with the U.S, it will continue to build up the military force. Such concern will be the biggest barrier for building mutual trust. Two governments has been promoting senior level military dialogues and meetings between China and the United States and achieved progress on some degree, but America’s army sales to Taiwan and other uncertain elements in military communications set a lot of challenges for both countries.

Even though Chinese military build-up could be a friction for Sino-American relationship, due to economic interdependency, the suspicion or conflicts on military area will not become hot wars or serious confrontations. They would try to deal with disputes through mutually respectful dialogue and cooperation as what they are doing now.

Leadership Transition in China

Leadership transition this year probably will be the most immediate and obvious political change in China. This leadership transition will bring trivial, if any, but the most immediate impacts to Chinese-American relations. The Chinese Communist Party will form the fifth generation of leaders in 2012 centered on Xi Jinping if everything goes as expected.

In China’s next leadership transition, which has taken place mainly at the 18th Party Congress in 2012, it seems highly certain that Xi Jinping and Li Keqiang will take the leading positions. Xi will be appointed General Secretary of the Chinese Communist Party, and Li will be the Premier (at the National People’s Congress of March 2013).

Xi Jinping (Left) and Li Keqiang

Xi is a very market-friendly person and he worked as a provincial chief or municipal boss in three places in China, namely, Fujian, Zhejiang, and Shanghai, all the economic-rich and the market well-developed areas. During his tenure in these three provinces, he always worked very well with private sectors, with entrepreneurs, whether foreign companies or joint ventures. Li was accepted into the newly reopened law department of the elite Peking University in 1978, after its closure in the Cultural Revolution. During his time there he was heavily influenced by liberal professors who advocated democracy and constitutionalism. Li also joined a team that translated Lord Denning’s Due Process of Law.He is regarded as something of a liberal although, if he has a personal vision beyond current policies, he keeps it carefully hidden from the public. Among the engineer-heavy leadership, Li stands out with a doctorate of economics from Peking University.



Although it is not clear who are going to fill the other seven spots in the Politburo Standing Committee of the CPC Central Committee, which is the actual power organ of China, one thing seems pretty clear: the fifth generation of leaders in China are economy-oriented, which means the increasingly intertwined Sino-American economic relations will be likely to continue to deepen. It then determines the Sino-American status quo in terms of China’s domestic politics and human rights will not be challenged a lot despite the leadership transition, especially given the fact that the Sino-American relations have become increasingly institutionalized.



Regardless of whether Obama is re-elected president in 2012 for another four years or a Republican candidate comes to power, the core elements of U.S. policy toward China is likely to remain the same because prioritizing economic and security cooperation continues to serve U.S. interests.

RMB Appreciation and US Debt

Economic interaction has a super vital impact on Sino-American relations considering the fact that the U.S. administration officials and their Chinese counterparts presided over an ever-increasing economic interdependency between the United States and China. They both need each other to recover from ongoing global financial crisis and they still have unsettled and potential economic conflicts. 

As the United States’ largest creditor and import country, second largest trade partner, third largest export market, China had an important influence on buffering negative impacts of the global economic recession and increasing job opportunities in the U.S. When President Hu Jintao paid the state visit to the U.S. in January this year, China announced a series of commercial deals to purchase USD 45 billion in the U.S. exports, supporting 235,000 jobs in the United States. China in turn has been influenced in important ways by America’s leading economy, source of foreign investment and technology. As the China’s largest export country, the U.S. is playing an irreplaceable role in boosting economic development in China considering the fact that foreign trade accounts for 49.34% of China’s GDP in 2010.

According to Pew Research Center, 47% of Americans think China is the leading economic power while only 31% think America is 

However, these two countries’ economic relations are not that smooth in recent years. More recent U.S. initiatives and complains reflect a wide range of U.S. interests and constituencies concerned with RMB undervaluation.  Criticism in the United States over China’s currency policy emerged in recent years against the background of the massive and growing U.S. trade deficit with China, USD 273 billion in 2010, and complaints from U.S manufacturing firms and workers over competitive challenges by Chinese imports. Facing the international pressure led by the U.S, RMB has been allowed to floating a narrow margin around a fixed based rate, determined with reference to a basket of world currencies since 2005. Even though RMB has appreciated cumulatively by 6.7% since June 2010 when RMB was unpegged to US dollar, groups of senators in September still announced that they would pursue legislation requiring the Obama administration to push harder for China to allow RMB to further appreciate in a quicker pace. As a response, China’s government called on the U.S. to self-examine its severe economic problems and claimed that blaming “undervalued” RMB exchange rate is not an effective way to reduce trade deficit and increase job opportunities.



The Chinese administration also eschews major initiatives that have the potential to disrupt existing economic relationships seen as largely beneficial for Chinese interests. As America’s largest creditor with 1.17 trillion in Treasury Securities as of February 2012, China has significant national economic interests in the stability of the U.S. dollars and in the United States meeting its paying obligations. Debt crisis in the U.S. facilitated China initially to criticize American government “irresponsible” and “immoral” of untangling the crisis through the wrangling among Republicans and Democrats. Standard& Poor’s stripping the U.S. of its triple A credit rating for the first time further alerted China. It demanded the U.S. address its structural debt problems and ensure the safety of the U.S debt China holds.  


China's response to US Debt Crisis

What are the implications for Sino-US economic relations in terms of RMB appreciation and debt crisis? These two conflicts matter valuation of RMB and both countries’ domestic economic health. Even though RMB has unpegged to US dollars, China carefully manages its currency to closely track the value of the U.S. dollar. Any major disruption in the stability of the dollar will therefore have powerful implications for the stability of the RMB and has potential complications for both countries’ economic health. Overwhelming RMB appreciation or a crisis in the value of the dollar due to debt crisis could directly spur inflation or a disruption in China’s export machine. Despite Chinese long-term planning to move toward an economic model of domestic consumption, exports to the United States are still a significant driver of economic growth in China. So if these conflicts not dealt very well would directly impact U.S. consumer confidence and spending ability, thus reducing demand for Chinese exports; and force tough inflationary decisions in Beijing about maintaining a link between the RMB and a plummeting dollar and thus decreasing the U.S. domestic demands; increase the risk to Beijing of maintaining its pole position as a global purchaser of international debt instruments, worsening global economy, including the U.S.

On the whole, the Sino-American economic relationship has had a positive effect on the relations between the two countries. Despite the increasing trade frictions and RMB dispute between the two countries, China and the U.S. have the least possibility to launch extensive “trade wars” at the expense of each other’s significant market and investment, especially during the global financial crisis. Both governments have declared many times that the current and potential economic conflicts can only be solved through negotiation and collaboration without harm to current economic interdependency.   

Strategic Conflicts-1970s to Present

Unexpected mass demonstrations centered in Beijing’s Tiananmen Square and other Chinese cities in 1989 represented the most serious challenge to China’s post-Mao leadership. The negative impact of the Tiananmen crackdown on the American approach to China was compounded by the unforeseen and dramatic collapse of communist regimes in the Soviet bloc and other areas, leading to the demise of the Soviet Union in 1991. These developments undermined the perceived need for the United States to cooperate pragmatically with China despite its brutal dictatorship on account of a U.S strategic need for international support against the Soviet Union. The soviet collapse also destroyed the strategic focus of American foreign policy during the Cold War. The ability of the U.S. president to use Cold War imperatives to override pluralistic U.S. domestic interests seeking to influence American interest groups focused on China’s authoritarian regime in strongly negative ways, endeavoring to push U.S. policy toward a harder line against China. Taken together, these circumstances generally placed the initiative in U.S-China relations with U.S. leaders and broader forces in the United States. Chinese leaders at first focused on maintaining internal stability as they maneuvered to sustain workable economic relations with the United States and while rebuffing major U.S. initiatives that infringed on Chinese internal political control or territorial and sovereignty issues.
Tiananmen Crackdown

The other conflicts are not as serious as the Tiananmen crackdown, but definitely heavily influenced Sino-American relations responded by strong remonstrance from China. The first turning point came with President Clinton’s advocacy in 1993 and then his withdrawal in 1994 of linkage between Chinese human rights practices and the granting of nondiscriminatory U.S. trade status to China. A second and more serious crisis resulted from Clinton’s decision in 1995 to allow the Taiwan president to visit the United States. In 1999 contentious negotiations over China’s entry into the WTO, Chinese mass demonstrations following the U.S. bombing of the Chinese embassy in Belgrade.

A pattern of dualism in U.S.-China relations has arisen as part of the positive equilibrium in this decade. The pattern involves constructive and cooperative engagement on the one hand and contingency planning or hedging on the other. It reflects the mix noted above of converging and completing interests and prevailing leadership suspicions and cooperation. Chinese and U.S. contingency planning and hedging against one another sometimes involves actions like the respective Chinese and U.S military buildups that are separate from and develop in tandem with the respective engagement policies the two leaderships pursue with each other. At the same time, dualism shows as each government has used engagement to build positive and cooperative ties while at the same time seeking to use these ties to build interdependencies and webs of actions that oppose its interests. The policies of engagement pursued by the United States and China toward one another are designed to tie down aggressive, assertive, or other negative policy tendencies of the other power through webs of interdependence in bilateral and multilateral relationships. The recent positive outcome in U.S.-China relations is based on an increasing convergence of these respective engagement policies.

So this is my last post regarding the overview of Sino-American relations from 1900s to present. From next week I will talk about the current issues on Sino-American relationship starting with one of the hottest topics-the valuation of Chinese currency Yuan.