The Dangerous Chip on China's Shoulder

China's long-dormant People's Liberation Army may be muscling into American-Chinese relations. That can't be good

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Illustration Oliver Munday for TIME

At a recent dinner devoted to U.S.-China relations, talk turned to the quarrel between China and Japan over the Senkaku Islands in the East China Sea. A prominent banker impatiently waved off the discussion. "America and China have more important things to talk about than a few rocks in the middle of the ocean," he said, proceeding to discuss the trade deficit. This is a profoundly mistaken understanding of international relations, though common in some business circles. The history of international conflicts is one of large, tectonic forces — like the rise of China — which cause fear, envy and resentment in other countries. Seemingly small, even trivial incidents can spiral into great-power competition and even war. Could anyone have predicted that a small crisis in Sarajevo would trigger World War I?

Asia is booming because it is at peace, with broad political stability. But China's rise is changing the structure of Asian geopolitics. Washington remains the most powerful political and military player in Asia and thus has a vital role in helping to manage this changing balance of power. Done right, it will make sure that disputes over a "few rocks in the middle of the ocean" don't turn into a new cold war in Asia with politicized trade pacts, arms races and proxy conflicts. That would be a very different Asia from the one we now see, an Asia considerably less interesting to bankers.

At one level, U.S.-Chinese relations are in good shape. Ever since Richard Nixon, American Presidents have worked to integrate China into the international economic and political system. China, for its part, has seen its primary mission as economic development and has been cooperative, not competitive, with the U.S. The godfather of modern China, Deng Xiaoping, directed Beijing to adopt a strategy of humility and a tacit alliance with Washington in its external relations. The grownups on both sides have seemed sensible.

But there are new pressures in the two countries urging a more combative relationship. You only have to listen to a congressional debate on China to understand the forces at work in the U.S. And yet it is in China, which is reputed to have the more controlled, rational and strategic decisionmaking system, where policy seems less predictable.

Over the past two years, China has dealt with the Obama Administration in a puzzling manner. Barack Obama came into office talking about the importance of great-power relationships and the supreme importance of strategic ties with China. He traveled to China and marked the trip by accommodating the Chinese in various symbolic ways. Despite all this, China has been distinctly combative toward Obama. It overreacted to his meeting with the Dalai Lama and a U.S. arms sale to Taiwan, both predictable and routine events. It humiliated Obama at the Copenhagen climate-change conference. And on Jan. 10, while Secretary of Defense Robert Gates was in China, it refused to agree to senior military-to-military ties between Beijing and Washington. These actions could be viewed as a series of misperceptions, miscalculations and single events. But when taken along with China's new assertiveness in Asia, they suggest that there is a larger trend at work.

There is much speculation among China watchers as to what's causing this turn. It could be the change in leadership that will take place in 2012, or the rise of a new, younger cadre of communist officials, or the importance of China's neoconservatives, or rising Chinese nationalism. Dai Bingguo, the man who is in effect China's Foreign Minister, recently wrote a 9,000-word essay setting out China's foreign policy and explicitly rejecting any talk of replacing or challenging American supremacy. This was a sign that the Communist Party still adheres to Deng's line of conciliation.

But there is another center of power in China that might not see things in exactly this light. The People's Liberation Army had always been a force within the Chinese system but was firmly subordinate to the party. From Mao Zedong to Deng, senior Chinese party leaders also had military credentials. For the past 15 years, this has not been true, and the PLA has been given larger budgets and greater autonomy. During his recent trip to China, when meeting with President Hu Jintao, Gates mentioned the Chinese military's test of its new stealth fighter. Hu appeared not to know about the test flight. The Chinese military, perhaps because of those budgets but also its ideological and strategic mind-set, seems to consider the U.S. as China's sworn enemy and to believe that a conflict between Beijing and Washington is inevitable. So the big question for U.S.-China relations right now is, Are the grownups really in charge? Specifically, does China's Communist Party control its military?