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China: Problems Multiply in the Year of the Rabbit

Updated on November 26, 2011

According to the Chinese Zodiac, we are in the Year of the Rabbit. Those born under this sign are of the most agreeable sort: empathetic, friendly and generous to a fault. From recent evidence, however, we can comfortably conclude that few in the present leadership of the People’s Republic of China were born in a Year of the Rabbit. China observers see a new assertiveness among the governing class in both pronouncements and policies. Such cockiness has not gone unnoticed by Washington, as reflected by President Barack Obama’s recent trip to several Asian countries, all of which are wary of the PRC.

The most acute of our China problems is self-inflicted, though the infliction is still viewed as a net plus for the US. Taiwan – formally known as the Republic of China – was once a nation-state in the eyes of American diplomats. No longer is this so. We withdrew recognition of Taiwan as a sovereign country in 1979, part of the scenario in which the PRC gained diplomatic favor. The one-China policy declares that Taiwan and China are one entity, the legitimate government of which sits in Beijing. At the time of this shift, President Jimmy Carter sought to emphasize that we would not simply abandon Taiwan, a long-time ally and beneficial trading partner:

But I wish also tonight to convey a special message to the people of Taiwan—I have already communicated with the leaders in Taiwan—with whom the American people have had and will have extensive, close, and friendly relations. This is important between our two peoples.

As the United States asserted in the Shanghai Communiqué of 1972, issued on President Nixon's historic visit, we will continue to have an interest in the peaceful resolution of the Taiwan issue. I have paid special attention to ensuring that normalization of relations between our country and the People's Republic will not jeopardize the well-being of the people of Taiwan. The people of our country will maintain our current commercial, cultural, trade, and other relations with Taiwan through nongovernmental means. Many other countries in the world are already successfully doing this.

Mr. Carter worked valiantly to suppress a smile during that speech, so confident was he of the widespread appeal of his diplomacy. Upon concluding, he leaned back in his chair and – thinking his microphone was no longer live – exulted, “Massive applause throughout the nation.” Perhaps he meant the nation of China, because there was little of it stateside. Many saw Taiwan as a trusted and reliable ally that President Carter – with the collaboration and approval of his two immediate predecessors – sold out by means of the PRC recognition.

With 20/20 hindsight, all can see that recognizing the most populous country on earth was simply a bow to the inevitable, bolstered by the many economic benefits accrued today by the United States. According to the State Department, the U.S. poured 60 billion dollars worth of investment capital into China in 2010, and trade between the two countries ballooned to 456 billion dollars that same year. But the prosperity generated by this relationship has its flipside: a tenuous moral basis to defend Taiwan if China chooses to attack; an increasingly large and lethal People’s Liberation Army, fed by China’s profits and rattling its sabers more often; and an aggressive trade policy by the PRC that skirts the standards of fairness.


Included in the Carter speech on normalization was the pledge to “maintain our current commercial, cultural, trade, and other relations with Taiwan through nongovernmental means.” History has demonstrated that “other” means the sale of arms, the extent and scope of which have been serious thorns in the US – PRC. relationship. According to the Congressional Research Service, the US has sold over 22 billion dollars worth of military hardware to Taiwan since 1990 alone. Items purchased by Taiwan include information systems and radar equipment, surface-to-air missiles, naval destroyers, amphibious assault vehicles, howitzers, F-16 fighter jets, Chinook helicopters, anti-submarine torpedoes and transport aircraft.

One diplomat justified the largesse as giving Taiwan the peace of mind necessary to enter into meaningful negotiations with Beijing. Ambassador James Lilley made the case thusly:

The implicit American premise was that a secure and stable Taiwan would be a more willing and successful partner in dealing with China. Judicious arms sales to Taiwan were part of this formula and in the past it has worked.... If elements of this broader formula are disregarded by the current Taiwan authorities, however, then the successful historic pattern has been broken. U.S. military support and arms sales cannot be used by Taiwan to move away from China—they were meant to make Taiwan feel secure enough to move toward accommodation with China. Our support should be conditional on upholding our successful pattern.

I am neither a diplomat nor a defense analyst, but that scenario is awfully pie-in-the-sky, in this layman’s opinion. Over 32 years have passed since normalization and – although the friendliness toward Beijing varies in Taipei, according to political party – there is little “accommodation” on the horizon. Indeed, the PRC has but one definition of accommodation: surrender. A beefed-up Taiwan is not about to accommodate the PRC and in so doing hand over its huge supply of American hardware. Complicating matters further is the possible election victory of the Democratic Progressive Party led by Tsai Ing-wen, a vocal champion of outright independence for Taiwan.

Has US military aid to the Republic of China kept the peace or is it pouring fuel on a smoldering fire? On the one hand, the PRC must think long and hard before attacking Taiwan. Though smaller, the ROC military is no pushover, and would exact a large percentage of blood and treasure from the PLA before all was said and done. On the other hand – and this is crucial – continuously arming Taiwan while maintaining the one-China policy may garner admiration from armchair strategists, but gives the United States two rotten alternatives in the event of hostilities: dumping Taiwan as a quasi-ally or certain war with China. Once the battle is joined, continued straddling is no longer an option.

Perhaps, though, the 22 billion has bought the US an out. Nothing in the Taiwan Relations Act of 1979 commits this country to aid in perpetuity, much less pledging troops to Taiwan’s defense. Gradually drawing down our aid commitment – as endorsed in the US-PRC communiqué of 1982 – keeps with America’s public commitments to China; the total of aid granted to Taiwan in the past 32 years immunizes us to charges of selling out, from rational parties at least. Clearly, the current practice is not sustainable.

Beyond Taiwan

Over the past couple of years, Communist China has resurrected old claims to territorial waters in the South China Sea and the islands encompassed by those waters. These interests were articulated first in 1947, the year the Party took power under Mao Zedong. In the spring of 2009, however, China fleshed out those claims to include “the seabed and subsoil thereof.” While seabed and subsoil may be natural extensions of littoral demands, China’s specificity has caused anxiety among neighbors.

The Philippines, Malaysia and Vietnam have made claims to areas that coincide with some Chinese claims. While China is willing to haggle under the United Nations Law of the Sea auspices, this may not always be so. The disputes focus on the potential fruitfulness of undersea oil and gas reserves. China’s burgeoning economy and standard of living leaver her ever more thirsty for fuel, taxing her patience with international protocols.

To assuage Pacific nations’ nerves, President Obama visited Indonesia and Australia early in November to demonstrate US commitment to their interests, bestow some troops and let China know that its neighbors stand united with its largest debtor. Whether this alters the PRC’s assertive rhetoric and prevents hostilities remain to be seen. In the long run, a lower profile is advisable. This from Doug Bandow at the Cato Institute:

Even if a new policy of containment seemed affordable, it still would not be in America’s interest to scatter military tripwires throughout East Asia. Americans obviously will remain very involved in Asian affairs. But alliances should be a means to an end, namely defending the U.S. Alliances should not become ends in themselves. It is hard to imagine what likely dispute—such as whose claim to the Paracel Islands is paramount—would justify the U.S. risking war with an increasingly well-armed nuclear PRC over issues the latter considered vital in its own neighborhood. Consider how Washington would react to Chinese military intervention in Central America.

As with Taiwan, Mr. Obama should let America’s friends take the lead in standing up to the Chinese. We may have interests in the vicinity, but we do not live there. If we intervene in regional disputes, a hidden hand is the optimal strategy.

Trade and Currency

Here is where increased US forcefulness will do the most good. University of California business professor Peter Navarro dismisses the idea that China is running an enormous trade surplus relative to the US because of lower wages. He contends a four-fold explanation for Chinese success:

The most potent of China's "weapons of job destruction" are an elaborate web of export subsidies; the blatant piracy of America's technologies and trade secrets; the counterfeiting of valuable brand names like Nike and Chevy; a cleverly manipulated and grossly undervalued currency; and the forced transfer of the technology of any American company wishing to operate on Chinese soil or sell into the Chinese market.

According to Navarro, each of these actions violates World Trade Organization rules. The US does have the power to take retributive action if it so chooses. It has thus far not so chosen. The WTO has not proven to be an effective referee in this matter. While slapping US sanctions on China may upset free-trade fundamentalists, it may be the only recourse if PRC practices are not altered.

Chinese President Hu Jintao
Chinese President Hu Jintao
Soldiers of the Peoples Liberation Army (PRC) at attention.
Soldiers of the Peoples Liberation Army (PRC) at attention.


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