How Can the United States Cope with the Emerging Power of Asia?

Dinah Lee-Kung and Samuel R. Berger

Council on Foreign Relations

June 6-7, 1997

FOREWORD

MUCH AS WEALTH and power crossed the Atlantic 100 years ago, so they begin to traverse the Pacific today. This shift in focus and influence led us, easily, to make Asia the topic for our second annual National Conference.

The conference was a formidable gathering of about 150 of our members. They asked tough questions about continued economic development, about the links between economic and security considerations, and about American appreciation of Asian cultures. Members also expressed a good deal of worry about whether Asian leaders understand U.S. policy, particularly toward China.

The next best thing to being there is reading Dinah Lee-Kung's account of the proceedings, contained herein. Dinah, a Council member and former Economist and Business Week special correspondent and bureau chief in Asia for over ten years, chronicles the complicated discussions with skill. The thanks of the Council Board goes to Dinah for this, and to Jennifer Whitaker, our deputy national director, for her continued impressive efforts on behalf of the Council's national members. Appreciation as well goes to Mike Peters, my deputy and the Council's chief operating officer, who now triples as national director.

The annual conference is the centerpiece of our new and considerable national program. It is the Council's only annual meeting of members. The format works: each year a new topic with key leaders speaking at mealtime with old friends and making new ones here at the Harold Pratt House in New York.
When Council members get together, the talk is almost always smart and fun. We've scheduled the next National Conference for June 5 and 6, 1998. On behalf of Pete Peterson, Hank Greenberg, and the rest of the Council's Board, I hope you can make an extra effort to be with us and one another next June.

Leslie H. Gelb
President, Council on Foreign Relations

PREFACE

THE 1997 NATIONAL CONFERENCE convened around 150 Council members from 24 states to discuss the U.S. role in Asia. The theme of the conference, "How Can the United State Cope with the Emerging Power of Asia?," grew directly out of last year's inaugural event. During the discussion in 1996 of U.S. global leadership, many participants had agreed that this country has to give priority to Asia. Thus we focused this year on U.S. policy toward an Asia in transformation; navigating the boom in trade and investment; the post(Cold War reconfiguration of security concerns; the growing contradiction between economic growth and sustainable development; and the debate over "values."

At the conference itself, the intense engagement of the participants reflected their sense of Asia's importance for the United States. The discussion covered a great deal of ground. Even in breakout sessions devoted to specific topics, participants repeatedly acknowledged the complex interrelationships among a variety of issues. Nonetheless, their geographical focus was quite narrow. During much of the conference an eavesdropper might have assumed that the overall topic was "the emerging power of China."

The emphasis on China was not surprising. Those present recognized and took thoughtful account of the other issues that most seriously affect U.S. interests in Asia--the relationship with Japan and the situation on the Korean peninsula. Because the United States has been working both problems over a considerable period of time, the terms of the policy discussion are familiar. On the other hand, the great and growing significance of the People's Republic for the United States has become apparent only since the end of the Cold War.

At the same time, China may well be America's main foreign policy focus for the foreseeable future. The conference discussion directly addressed the fact that U.S. policymakers and the American public are just now getting used to this idea. Many participants felt that foreign policy had not yet freed itself from Cold War concerns: they urged the administration to reorder its foreign policy priorities. In a dominant conference theme, participants warned against turning China into our next adversary and underlined the need to make the most of opportunities in Asia. (Some remarked that even the discussion questions posed by the Council reflected an outdated adversarial perspective.)

In the conference, their own conversation mirrored the complexities they were identifying. While a resounding consensus was heard in favor of a clearer and more consistent U.S. policy, the participants' reflections over a day and a half added up to a many-sided picture of China and its Asian context. Recognizing numerous competing interests, they were understandably cautious about proposing large-scale departures from current policy.

Perhaps because participants found conflict more interesting to talk about than commerce, they also spent a somewhat greater portion of their time considering security and human rights issues than economic relationships and trade regimes. Opinion divided over the best tactics for conflict prevention. Some saw greater utility in demonstrations of force and others favored expanding communication. However, many concurred that the current ambiguity of the One China approach to relations with Taiwan is likely to lead to misunderstandings and conflict.

Turning to economics, the discussion focused, like the U.S. debate, on trade--specifically, on China's most-favored-nation (MFN) status and access to the World Trade Organization (WTO). At the conference, as in the U.S. national discussion, questions about facilitating trade with China and bringing Beijing into global economic forums raised closely related issues about values. Should the United States soften direct pressures on China concerning human rights infractions and rely on the positive influence of expanding prosperity and interaction with the West? Will the carrot of WTO membership lead China to comply more readily with international norms and standards?

Participants had evidently spent a fair amount of time thinking about these trade-offs. Rather than clear-cut pros and cons, the conversation revealed a wide range of nuances. Although no one dissented from the proposition that China ought to be accorded MFN status annually, participants split on the utility for human rights progress in China of reviving the debate on this issue every year. Positions on admission to the WTO were less clear: the group voiced more definite support for consistent international trade standards--some emphasized holding the line, and others educating China before granting admission--than on inclusion or exclusion.

Participants also split on the priority human rights ought to have in U.S. policy toward Asia. Few disagreed with the idea that reaping the fruits of a strong economic relationship with China and Asia is the United States' paramount interest. A number of different views were set forth, however, on whether the United States needs to or can modify Asian political or social values.

Whereas the debate about values colored deliberations on a range of issues, attention to environmental challenges was confined to a small group of participants and took place largely apart from the consideration of the relationship between economic growth and future resource degradation. Few of those involved in this discussion concluded that private sector relationships or the progressive "development" of China and other Asian countries would improve prospects for environmental protection. Nor, unlike proponents of a strong human rights policy, did those expressing anxiety about the Chinese/Asian environment voice the need for a more forceful U.S. stance.

Finally, there were some parallels with last year's conference. Participants echoed last year's plea that a long-term U.S. perspective on this America's interests and strategies, analogous to the broad perspective supplied by the Cold War template, replace ad hoc action and reaction. Again participants spent a good deal of time discussing multilateral versus bilateral approaches. Unlike last year's strong preference for multilateral tactics, however, on Asia the equation shifted from issue to issue. Given overwhelming U.S. military capabilities, Japan's historical aggression, and the lack of a regional security framework, the discussion of security, not surprisingly, focused almost solely on U.S. bilateral initiatives. On economic relations, the utility of separate bilateral (MFN) and multilateral (WTO) approaches each came under scrutiny. On human rights, proponents of a strong stance were inclined to suspect that multilateral action would mean inaction. Perhaps in part because environmental issues still seem less immediate, those advocating environmental responses favored multilateral initiatives as more acceptable to Chinese and other Asian leaders.

The conference benefited from the efforts of many Council colleagues. I would like to thank particularly Jerry Cohen and Liz Economy, whose expertise contributed so much to the success of the event.

The following account, by Council member Dinah Lee-Kung, surveys the territory covered by the conference, and illuminates the discussion, in much more detail. Lee-Kung brings to the conference proceedings many years of experience reporting from Asia for The Far Eastern Economic Review, The Economist, and Business Week. I commend her report to you.
Jennifer Seymour Whitaker
Deputy National Director,
Council on Foreign Relations

HOW CAN THE UNITED STATES COPE WITH THE EMERGING POWER OF ASIA?

DINAH LEE-KUNG

ON FRIDAY AND SATURDAY, June 6 and 7, 1997, the Council on Foreign Relations hosted its second annual National Conference, drawing members from across the United States to discuss the future of U.S. relations with Asia. Continuing a Council tradition of involving a broad spectrum of professionals, the conference underscored the Council's push to engage the full range of regional perspectives in its intellectual work.

A fifth of the participants at the conference were from the West, a fifth from the Midwest, a fifth from the South and the Southwest, a tenth from New England, a quarter from New York and Washington, D.C., and a small contingent from abroad. The participants spanned many fields as well, coming from business and academia (nearly a third each), nonprofit organizations (about a fifth), and law, government, and media (each about a tenth). But for the purposes of the conference, they set aside their particular areas of expertise and approached the agenda on common ground, as generalists.

The conference was designed to elicit the ideas of all participants to the fullest extent possible. Thus most of day one was spent in breakout sessions led by Council Board members. The tone of the conference was set Friday morning by Harvard University Professor Roderick MacFarquhar's vivid portrait of post(Cold War Asia. Friday also featured a luncheon panel, with Yuan Ming of Beijing University; Ambassador Kim Kyung-Won of the Institute for Social Sciences in Seoul; and Dr. Yoichi Funabashi from Asahi Shimbun, offering Asian perspectives on U.S.-Asian relationships. Friday's dinner concluded with a major administration statement on China policy by national security adviser to the White House, Samuel R. Berger, which was covered by the national media. At the Saturday morning plenary session, Friday's discussion leaders summed up breakout group conversations. Participants then took the floor to elaborate on and conclude their previous discussions. Finally, Council Senior Fellow Jerome Cohen drew together the disparate strands in a wrap-up luncheon address. No account of the conference would be complete without noting the lively spirit of tolerance, humor, and bonhomie that animated everyone, even at moments of sharp disagreement.

In keeping with Council tradition, all speeches and extemporaneous comments over the two days, with the exception of Samuel Berger's, were off-the-record. This report seeks to capture some of the main themes and the flavor of the exchanges on specific issues that dominated the conference.

China: Engagement without Endorsement
Because China looms so large in Asia--and in view of its growing power in American imaginations--the People's Republic often seemed to crowd out other Asian actors for conference participants. How, they asked repeatedly, can we conduct Sino-U.S. relations more sensitively, while still taking account of all the conflicting interests that bedevil U.S. policy today? And how can we foster economic relationships without holding all other interests hostage?

Looking at security issues, participants assessed bilateral versus multilateral approaches. As China grows stronger economically and militarily, should the United States anticipate a "realist" power balance (either between America and China or, with the United States as "balancer," between China and other Asian countries, including Taiwan)? Or should the United States seek to forge a new cooperative effort with China, but also include Japan, the Koreas, and members of the Association of Southeast Asian Nations (ASEAN)? Although this vision of a multilateral security effort appealed to many, discussants recognized the difficulty of trying to create a formal security grouping along the lines of the North Atlantic Treaty Organization (NATO). Nor, for historical and geographic reasons, did many see ASEAN as the basis for organizing a traditional security framework. For one thing, unlike NATO, ASEAN did not originate under the canopy of U.S. occupation; for another, the lack of an obvious adversary has made the need for a formal bloc less pressing.
If a formal security forum came into being, however, many participants concurred that it should not exclude China. Beijing's exclusion would only exacerbate its fear of containment, and provoke nationalistic or militaristic tendencies. "If you think of China as the enemy, it will become the enemy," one participant warned.

Others stressed China's desire for enhanced "mutualism" in its relations with the United States. China, they noted, is already cooperating to some extent with formal weapons control regimes. Although Beijing maintains weapons supply relationships that trouble Washington and an inadequate system of export controls, China supported the indefinite extension of the Nonproliferation Treaty; it has joined the Biological Weapons Convention; it has ratified the Chemical Weapons convention; it supports negotiation of a global treaty to stop production of fissile materials for nuclear weapons; it has agreed to abide by the Missile Technology Control Regime and has curtailed its nuclear cooperation with Iran.

On "the Chinese threat," most members thought deliberate aggression against U.S. interests by the mainland are unlikely in the near future. According to the Central Intelligence Agency (CIA) and the Pentagon, China will not have the capability to threaten for many years. Discussing what lies behind the increased Chinese military buildup, Sinologists in the group noted that the Chinese military has entered a period of post-Gulf War self-consciousness about their need to modernize. Furthermore, the People's Liberation Army (PLA) has even more clout than previously; it has been drawn into a larger political role both by its participation in the nationwide crackdown on dissent in 1989 and, subsequently, in power struggles during the transition from Deng Xiaoping to Jiang Zemin.

On China's motivation for asserting military power, one member asked whether sending the U.S. aircraft carriers to the Taiwan Straits in March 1996 might have spurred a stronger military buildup aimed at the United States. In addition, China might well feel entitled to take military action in its own hemisphere that other nations (such as the United States) view as aggressive. Thus the United States may expect further incursions into the South China Sea. Although most thought the Chinese more likely to seek access to energy through commerce than military force, China's status as a net energy importer could increase pressures to ensure supplies.

Taiwan in Dire Straits?
Although at the moment Taiwan is unhappy with the One China policy and the mainland government is too inflexible for confederacy, many participants were optimistic about the island's longer-term future. They expressed hope that Taiwan would either be granted special status within an emerging federated structure or that it would eventually gain independence. One member asserted that the 1984 Sino-British Basic Agreement for Hong Kong has already paved the way for a future federal structure.

Other participants, however, worried that while the United States has prepared extensively for conflict with North Korea, its Taiwan policy is more ambiguous. Most agreed that the United States would be making a serious mistake if it abandoned the One China policy. A number urged that the United States go further, strongly discouraging any disruption of the One China status quo by either the People's Republic or Taiwan. The return to China of Hong Kong and then Macao (in 1999) will free up Beijing's energies for reunification with Taiwan. Thus many doubted that the United States could continue its strategy of deliberate ambiguity indefinitely. Doing so might encourage both China and Taiwan to think the United States will take its side in the event of a violent outbreak.

A number felt, however, that the key obstacle to minimizing violence in the Taiwan arena is the "force option." Given the possibility that China might blockade and even invade Taiwan, many saw the deployment of U.S. aircraft carriers as a clear hands-off signal to Beijing. As long as China retains the option of force vis-à-vis Taiwan, the United States needs to be prepared for the possibility of violence. Many feared that China may have painted itself into a corner by stressing the force option to the point where it cannot retract it.

The Koreas: Collapse, Confrontation, or Soft Landing?
Given the current crises on the Korean peninsula, it was not surprising that Korea dominated conference discussions of short-term security. Participants wrestled with "hard" versus "soft" landing scenarios for North Korea. One participant declared that Kim Jong Il is more firmly in charge of the country than has been widely reported. In this view, Kim's delay in obtaining two of the important political titles held by his late father was an expression of deference rather than a sign of weakness. In fact, the younger Kim was able to unify the fractious post-Kim Il Sung elite when a North Korean submarine ran aground in South Korea, and during the defection this year of the inventor of Korea's political philosophy, Hwang Jang Yop.

Others asserted that a prolonged military confrontation between the North and the South is unlikely. The condition of the North Korean military continues to degrade and its ability to wage war will be eclipsed in three years' time. Any fighting would be a short-lived "meat grinder." Regarding South Korea, although in late 1996 the South Koreans refused to promise senior U.S. government officials that they would not retaliate against the North, the atmosphere for the soft landing option has improved considerably since then. Seoul apparently underwent a change of heart during the first six months of 1997 after discovering that early reunification with the North (the "hard crash option") might cost anywhere from $200 billion to $3 trillion.

On the other hand, some felt that reports of mass malnutrition and uncharacteristic admissions of vulnerability by Pyongyang increased the apparent likelihood of an early collapse. They asked whether an implosion might be triggered by hunger, economic isolation, and political exhaustion; whether armed conflict might be initiated by the North; or whether a soft landing might be supported by international assistance. One informed participant reported that Beijing-based European ambassadors with good intelligence on North Korea feel that implosion is already irrevocably underway. Another, more sanguine, estimated that the United States would have five years in which to manage a breakdown. In the event of an implosion, participants worried that the nuclear weapons now in North Korea would fall into the hands of dissidents, smugglers, or other powers.

Japan: Still the U.S. Comrade at Arms?
Turning to the broader concerns involved in the U.S.-Japan security relationship, participants asked, first of all, whether the United States might need to adjust its relationship with Japan to the emerging situation in China. One participant joked that the Chinese seem to have two great fears: "One, that the United States and Japan will remain allies, and two, that they will not remain allies." Another feared the United States might try to placate China by agreeing to contain Japan.

When the focus shifted to U.S.-Japanese relations, however, the majority of participants predicted that the U.S.-Japan alliance would only grow stronger. Participants asserted that the Japanese are no longer convinced that trade and investment alone will solve Asia's, particularly China's, security problems. As a result, Japan is tightening its security relationship with the United States. The United States, however, needs to improve its approach to Japan. For example, the Japanese should be consulted about U.S. shifts in Taiwan policy, as they were not during Washington's last-minute reversal over President Lee Teng-hui's visa, or the dispatch of carriers to the straits.

MFN and the WTO
When conferees focused on U.S. interests outside the security realm, they dwelled on the linkage between economics and human rights. On trade issues, one group concluded that the annual review of China's MFN status, and the threat of sanctions, probably impedes U.S. businesses in China without achieving much on human rights or proliferation compliance. Some of those in the group favored granting permanent MFN status to China. Others felt, however, that the linkage between trade and politics restrains the Chinese somewhat; even though MFN should be granted, the annual debate is useful as a regular check on China's behavior. Still others expressed regret that the administration seems to be backing off the linkage between MFN and China's performance in other areas. In general, while participants were divided on the usefulness of MFN as a pressure point on China, there was no interest in outright decertification.

For a number, China's admission to the WTO, rather than MFN, was the important trade issue. WTO membership, though, raises a variety of questions: What kind of phase-in periods would China be allowed for the dismantling of trade barriers? Would China act positively or negatively once accepted? Would the Chinese infrastructure allow for enforcement of WTO rulings? While one group concluded that the United States should admit China while maintaining standards, another emphasized the need to assist China in making the necessary reforms before admission. Finally, noting the Clinton administration's apparent failure to meet other international trade targets it had laid out, conferees worried that the entire WTO negotiation might fail.

Looking at longer-term prospects, some participants took issue with conference questions that appeared to imply that economic growth in Asia is a threat to the United States. Asian growth will be beneficial to America, they said, as long as it is symmetrical and the playing field is level. The United States needs to overcome a bad habit of overestimating the strength of its competitors. This concentration on "enemies"--the Soviet Union in the 1960s, the Arabs in the 1970s, Japan in the 1980s--has distracted the United States from promoting trade and exploiting its strengths.

Others, however, questioned the United States' ability to keep its market share in Asia from stagnating, while Japan's share is increasing. To maintain current market share, the United States would have to double its total exports to Asia over the next decade. Considerable obstacles remain. Tariff barriers in China still average 40 percent; the Korean market remains significantly closed, especially in the auto sector, and U.S. financial services and telecommunications industries fight major obstacles in trade negotiations.

Several participants asserted that the U.S. trade experience with Japan ought to be useful in setting a future course vis-à-vis China. Harking back to the large U.S. trade deficits and flow of U.S. technology to Japan, they asked whether the United States envisions the same sort of asymmetry with China. To reduce asymmetries, they argued, the United States needs to engage more mid-sized companies in the bilateral dialogue.

Others proposed that the United States work to maintain export strength by overhauling its commercial diplomacy. While the United States exports to Asia $200 billion a year, it spends only $600 million yearly to promote these exports. Currently the United States allocates most of that to agricultural subsidies where it already has a clear advantage. Instead, Washington should focus on emerging industries--services, communications, entertainment.
Participants supported the other side of the coin, fostering Asian investment in the United States. The Japanese investment in the United States increases Japan's stake in the health of the U.S.-Japan relationship. Analogously, Washington may be able to improve ties with Beijing by encouraging the PLA, a major commercial force on the mainland, to invest in the United States. (The PLA and its commercial branches, conferees noted, already maintain a number of trading operations on U.S. soil, some overt and some indirect.)

Promoting Growth while Curbing Pollution
With all its benefits, the rapid development of Asia's economies has also displaced rural populations to rapidly expanding cities. Over the next 30 to 50 years, the rural-urban balance in Asia will shift from 75:25 to 25:75. Since environmental disturbance and pollution have inevitably attended economic development and urbanization, it is not clear how Asian countries can continue their accelerated growth without severely damaging their natural resource base and increasing atmospheric pollution.

As the major potential polluter, China was the main focus of discussion. By virtue of its size alone, China is already one of the world's leading producers of greenhouse gases. If China's per capita car ownership were to equal that of Bangkok, its present eight million autos would mushroom in 50 years to 800 million. As several participants noted, China is destroying an enormous amount of arable land to make way for modern infrastructure. Continuing this pace will put tremendous pressure on global food supplies and may force massive migration out of China.

The only optimistic scenario--not widely endorsed at the conference--was that Asia, including China, would grow its way out of its environmental problems, with homegrown demand for environmental protection accelerating in tandem with political liberalization. At present, however, decentralization of authority over China's modernization is exacerbating the challenge of pollution control and prevention in China. Although the Chinese have recognized many of their problems, they need to be nudged from rhetoric into action. U.S. vulnerability to China's environmental practices is a strong argument for engagement. Unfortunately, China sees its acknowledged environmental problems largely as a domestic concern.

As with human rights, many participants felt that a multilateral approach to environmental infractions would ruffle China's feathers less than bilateral pressure. Moreover, many doubted that U.S. firms, fearful of losing their competitive edge, would pursue environmental initiatives on their own. Thus the United States needs effective long-term policy on this issue; more financial support for environmental programs; and, importantly, more active or skillful use of multilateral channels.

Moving beyond the physical environment, the discussion of sustainable development also covered the sociopolitical impacts of Asia's growth. Participants noted how often growing wealth and disparities lead to violent conflicts. The poor inevitably suffer most from environmental degradation and rapid industrialization, and environmental protest sometimes offers an opportunity for voicing more general concerns. The upheavals in Indonesia triggered by destructive logging practices over the last six months are a case in point.

Nor does economic growth always lead to political progress. While it seems to have done so in South Korea, numerous counterexamples were cited. One skeptic declared that no one had ever been able to show him the dipstick indicating how much economic growth led to how much political pluralism. Another contrarian challenged the oft-cited example of Taiwan's democratic elections, which he said were "run totally with the help of gangsters." In Singapore, economic growth has made the middle class more compliant, not less. Nor has prosperity alleviated political repression in Kashmir, Tibet, or East Timor.

Values
When conferees focused directly on sociopolitical values, definition--of Asian versus Western values--was the first order of discussion. One member reminded the group that the discussion of values rightly covers not only human rights abuses but information flows and the legal climate for business. Once over semantic hurdles, the group broadly disagreed over how distinct the differences really are. Most members acknowledged that a perception of differences existed, about degree, at least, if not kind. It was also suggested, however, that the debate over values often serves as a political expedient for Asian governments.

Some linked the values debate to the challenge for Asia's great historical cultures to establish a post-colonial identity. Others doubted the usefulness of viewing "Asian values" together, given the variety of political systems, religious beliefs, and national histories in Asia. In this regard, some questioned using the tiny republic of Singapore as a model of liberal development for any larger and more complex Asian society. (Singapore's success story so impressed the Chinese leadership, reported one member, that Beijing considered offering President Lee Kuan Yew the mayorship of Shanghai.) On the relevance of cultural models, one commentator summed it up succinctly, saying "Singapore is socialism with Chinese characteristics, Hong Kong is capitalism with Chinese characteristics, Taiwan is democracy with Chinese characteristics, and China is 1.2 billion people with Chinese characteristics."

Turning to human rights issues, participants disagreed sharply over whether human rights in China had improved or deteriorated. Some echoed the State Department judgment that the situation had not improved, and had probably worsened--particularly with regard to Tibet, the churches, and the dissident movement--since 1989. Others argued strongly that the United States must view human rights in Asia as part of a longer continuum, acknowledging marked progress in basic provision of food and shelter, as well as freedom of movement for the general population. This group preferred to compare freedoms for the average person in China now with those, say, of the early 1970s.

The business sector offered another perspective: only ten years ago Japan was as serious a violator of copyright and intellectual property issues as China is today. Taiwan has only started to comply with standards satisfactorily. Might the United States be more patient with China? In this context, others urged a less patronizing tone on the part of the United States. Here they found common ground with those who hoped to see more self-awareness and candor reflected in exchanges with the Chinese about the wealth gap, prison conditions, and education and housing shortfalls in U.S. society.

Turning to the modalities for engaging on political values, conferees showed little interest in the recent congressional push to pressure China on human rights by increasing financing for Radio Free Asia, restricting visas to mainland Chinese officials, or selling missiles to Taiwan. Instead some asked whether there was a possibility of setting out a graduated set of sanctions rather than the current all-or-nothing approach.

It was also suggested that the United States might get around the problem of social and political differences by relying on the rule of law as the yardstick for progress. Several participants, however, argued persuasively that "the rule of law" was in danger of becoming a mantra whose implications needed to be better understood. They asked, for example, whether the rule of law necessarily favors civil rights. Where distorted it can become rule by law--a way for governments to legitimize their illiberal actions. In one case of unintended consequences, U.S. pressure for more copyright compliance actually increased the power of governments to approve and censor publications and to demand the re-registration of printing presses.

Looking at multilateral options, U.S. concerns about torture, religious oppression, child labor, freedom of the press, and other human rights issues can be addressed under a number of international agreements. The Geneva Conventions, the International Humanitarian Law, the U.N. Universal Declaration of Human Rights, and other international conventions covering the rights of the child, intellectual property rights (IP), and copyright issues are all examples. Several participants advocated cooperative initiatives involving Japan in combating corruption. The Japanese are unhappy with the business culture in the region; while they won't lead an anti-corruption charge, they would join the United States. In dealing with corruption, the Good Governance Policy Agreement reached by the Asian Development Bank has also fostered real strides on transparency and policy predictability.
Many who criticized the high-profile criticism of Asian human rights by some U.S. politicians and lobbies endorsed this multilateral approach. Arguing that U.S. public pressure on other governments was proving counterproductive, they felt a multilateral push for human rights concerns would be much more effective. Some of those particularly concerned about human rights, on the other hand, feared that reliance on multilateral pressures might let the United States off the hook, resulting in half-hearted efforts like the unsuccessful U.S. lobbying for a vote on Chinese abuses in the March 1997 meeting of the U.N. Human Rights Commission.

How Should the United States Cope?
Focusing first and foremost on China, participants reiterated the need for a more cooperative Sino-American relationship. They also agreed broadly that the United States needs to be more consistent, whatever its policy, and to maintain its standards. Yet participants acknowledged that those recommendations hardly provide a road map.

Echoing the concern of many about the inconsistency of the administration's Asian priorities, one participant worried that the appointment of a strongly Eurocentric secretary of state, Madeleine Albright, might exacerbate the problem. Nor was media coverage of foreign affairs deemed helpful in producing an informed electorate. "Do the American media, Congress, or the general public even want to understand what is actually happening in China?" someone asked. American confusion over national priorities was contrasted with Beijing's single-minded pursuit of its interests.

Considering U.S. options on China, most participants concurred in rejecting containment. On the other hand, "constructive engagement" with China no longer seemed to many an effective banner for Sino-American interaction. For some, this approach could easily become a moral cover for ignoring issues of human rights and weapons proliferation. Refinements on policy themes suggested engaging without "endorsement," "silence," "capitulation," or "compromise"--that is, without being muzzled or intimidated by China or retreating from open expression of U.S. principles. "The Dalai Lama should not have to sneak in the back door while John Huang marches in the front door," stated one participant.

Looking at the bottom line, many participants agreed that the U.S. trade deficit was the most compelling problem in the bilateral relationship. And in the absence of clearer leadership from Washington, perhaps a new China policy would have to be forged elsewhere. In that context, it was suggested that the U.S. lobbies at odds over China select from their array of complaints some common denominator to address first. Given the dramatic imbalance in bilateral trade, some participants asked, why couldn't deficit, trade, labor, and wage concerns be a starting point for a domestic alliance, leaving more controversial or intractable differences on the back burner or to the multilateral arena?

Non-Zero-Sum Games
Summing up the wide-ranging conference discussion of long-term U.S. interests, participants tended, on the whole, to dismiss the possibility of imminent security crises, assuming that with patience, considered dialogue, and time, these issues would be resolved. Although they focused a good deal of attention on the security issues, most expressed the conviction that the United States should give priority to the pursuit of open trade and continued prosperity. To do this, however, the United States must elevate long-term interests over short-term fears. While the United States is working hard to maintain stability in the short term, it needs to be more aggressive in advancing its ongoing economic stake in the region.

It was clear in the discussion that Asia is still in many ways a new region for Americans, where we are only beginning to educate ourselves about opportunities and risks. The pace of events there is forcing the United States to hasten changes in its post(Cold War security posture at a time when the American public wants above all to cash in on their peace dividend. The participants' informed responses to these issues seemed to put them firmly out in front of public opinion. Recognizing this, they expressed concern about when and where in the debate the general public will join them. Until then, the ability of policymakers to outline distinct goals and develop understandable policies will be severely hampered, and U.S. responses to events in the region, rather than hewing to long-term interests, will be ad hoc.

Same Place, Next Year
Next year's National Conference will convene on June 5 and 6, 1998. Once again, Council members from around the country will continue their ongoing discussion of the U.S. adaptation to the post-Cold War world. The Council has not yet chosen the conference theme for 1998. Among U.S. interests, however, it is clear that Asia will continue to have high priority.

BUILDING A NEW CONSENSUS ON CHINA

SAMUEL R. BERGER

I WANT TO USE this occasion to tell you where President Clinton hopes to take the relationship between the United States and China as we enter a new century. But in looking ahead, I think it is important to look back at how that relationship evolved over the past two-and-a-half decades. Indeed, this year marks the twenty-fifth anniversary of the Shanghai Communiqué, which led to the end of China's isolation, normalization of our relations, and, until recently, a broad national consensus in support of strong U.S.-China relations.

The simple truth is this: the direction China takes in the years ahead will be one of the most decisive factors that will determine whether the next century is one of conflict or cooperation. The emergence of China as a great power that is stable, open, and nonaggressive--that embraces political pluralism and international rules of conduct; that works with us to build a secure international order--the emergence of that kind of China profoundly is in America's interest.

China, of course, will define its own destiny. But the decisions we make will influence China's evolution. To wield our influence effectively requires sustained domestic support for a revitalized relationship with China and a clear-eyed approach based on our national interests. I am concerned that support is fracturing--and convinced that rebuilding it is vital to America's future.

The Shanghai Communiqué grew from a recognition both in China and the United States that there are long-term strategic advantages for both our countries in cooperation--and that we could reduce our differences without forsaking our fundamental principles.

Before Shanghai, we had virtually no contact with China--save for the occasional frosty meeting between mid-level officials in Warsaw, scholarly gatherings, and contests between sports teams. Today, China's doors are open to tens of thousands of Americans--and tens of thousands of Chinese are studying, working, and living in the United States.

Perhaps most important, Shanghai was accompanied by an extraordinary period of economic change in China and opening to the world. Since 1972, China has quadrupled its economic output; its economy has grown at an average of eight percent a year and it is now the tenth-largest trading nation in the world. In 1972, China stood outside most of the international institutions and agreements that undergird our security and prosperity. Today, China has signed on to many of them, from the World Bank to the Chemical Weapons Convention, from the Universal Declaration of Human Rights to the Comprehensive Test Ban Treaty.

These past two decades also have seen genuine improvements in the lives of hundreds of millions of Chinese--greater freedom of movement and choice of employment, better schools and housing, improved access to information, and a more open process for choosing local officials.

Each of these strides was the result of choices made by China's leadership--to reform their economy and to play a more constructive role in the world community. These choices were not made because of U.S. policy--but they would not have been made without the right U.S. policy, without the United States making clear to China that its participation in regional and global affairs was necessary, that it is not our enemy, and that its growth and development were welcome.

Here in America, the changes that began in the 1970s produced a renewed fascination with China, and a broad consensus that the road we had taken from Shanghai was the right one. But in the late 1980s, a confluence of events began to weaken that consensus--and now threatens to unravel it.

First, the collapse of the Soviet Union undermined the then-prevailing strategic imperative for a strong relationship with China. Why retain a China card when the Soviets had folded their hand?

Second, Taiwan's remarkable progress toward democracy began to call into question our One China policy--the linchpin of our relations, but inherently built around the asymmetry of an official relationship with China and an unofficial one with Taiwan.

Third, the political reforms in China that many expected would emerge from economic reform failed to materialize. Focused on control and fearful of chaos, the regime kept a tight lid on democracy and dissent.

Eight years ago this week, these fissures blew wide apart in Tiananmen Square. In one terrible spasm of violence, Beijing crushed the mostly student democratic movement, shattered the hope that China would take a decisive step toward democracy, and began the unraveling of the consensus on China policy in the United States.

Congress understandably was eager to demonstrate America's condemnation. It sought to link China's progress on human rights to its most-favored-nation trade status. In 1992, linkage gained 60 votes in the Senate and 409 votes in the House--and it won broad public support. But the policy proved unworkable. The linkage stick was as blunt as it was big. In effect, it threatened to destroy the relationship in order to improve it. And it posed a false dichotomy: stand up for human rights and stop economic interaction or trade with China and abandon human rights.

Over the first two years of the Clinton administration, we moved away from five years in which the MFN debate defined America's China policy and toward a renewed strategic dialogue with China. We have pursued this dialogue not for its own sake, but as a vehicle for advancing our national interests: increasing areas of cooperation on shared problems and dealing with our differences--candidly, respectfully, patiently.

Our strategic dialogue with China is built around three propositions.
First, China stands at a crossroads, with conflicting forces pulling in opposite directions: inward-looking nationalism and outward-looking integration.

The fear of chaos and disintegration in China is a consistent thread that runs through much of China's history. From the days of the Qing [Ch'ing] dynasty, the center frequently has not held. Even during the period since the 1949 revolution, when communist ideology provided a cohesive framework, China underwent the searing experience of the Cultural Revolution. Today, with the collapse of that ideology, and in the absence of a legitimizing democracy, there is a distinct temptation among some in China to pursue a more chauvinistic, nationalistic direction in order to avoid losing control. Should that instinct gain sway in this new post-Deng era, China could turn away from the international community and toward hostility and hegemony, threatening stability in Asia.

But the strong pull of integration competes with the grasp of nationalism. Increasingly, China's economic growth--which now in effect substitutes for ideology--is fueled by the outside world. Last year, foreign firms doing business in China were the source of more than 40 percent of China's exports. And China's participation in international organizations has jumped from a handful 20 years ago to more than 1,000 today--from international agricultural organizations to aviation oversight regimes, from ocean management boards to space satellite conventions--slowly entangling China in a web of international arrangements necessitated by a global economy.

The need for capital to fuel China's growth--for which China must compete with other compelling new markets around the world--increases the need for greater rule of law and predictability, at least in its commercial affairs. And the fellow travelers of the new global economy--computers and modems, faxes and photocopiers, increased contacts and binding contracts--carry with them the seeds of change. Can China successfully make the next great leap toward a modern economy in the Information Age without producing the result of empowering its people, further decentralizing decision-making, and giving its citizens more choices in their lives? Possible--but I doubt it.

That leads me to the second proposition of our strategic dialogue: a relationship as complex and multifaceted as that between China and the United States cannot be defined by any one issue--positive or negative. It requires that we expand areas of cooperation while dealing forthrightly with our differences. Let me touch on four issues that underscore the breadth of the relationship, and its importance to America's interests: the spread of weapons of mass destruction; our increasingly complex commercial ties; stability on the Korean peninsula; and the health of the global environment.

Stopping the spread of weapons of mass destruction is one of the most compelling priorities we face today. The record with China is neither as bad as some portray--or as good as we would like. China supported the indefinite extension of the Nonproliferation Treaty; it has joined the Biological Weapons convention; it has signed the Comprehensive Test Ban Treaty; it has ratified the Chemical Weapons Convention; it supports negotiation of a global treaty to stop production of fissile material for nuclear weapons; it has agreed to abide by the Missile Technology Control Regime, which controls the export of technology for missiles that can deliver weapons of mass destruction. China also has curtailed its nuclear cooperation with Iran--especially in areas that might contribute to Iran's nuclear weapons capability--and pledged not to assist unsafeguarded nuclear facilities in third countries.

At the same time, China maintains weapons supply relationships that trouble us and an inadequate system of export controls to assure that in a country as large as China unauthorized sales do not occur. Last month, we imposed economic penalties against several Chinese companies for providing assistance to Iran's chemical weapons program. And we continue to raise with China our concerns about the possible sale of missile technology to Iran and Pakistan. We will use all the tools available to us--cooperation, persistent diplomacy, targeted sanctions when appropriate--to secure improvements in China's nonproliferation policy and bring it into all the global regimes that restrict dangerous military transfers. Increasingly, I believe China must come to see that it is in its own interest not to help arm rogue nations or feed instability near its own borders.

On the economic front, the United States has played a central role in China's modernization and economic progress. Since the Deng reforms began, American firms have made $175 billion in direct investments in China--our companies are now the fourth-largest source of investment in the PRC after Hong Kong, Taiwan, and Japan. We are China's largest market, a not insubstantial factor in fueling China's growth.

We have worked through some difficult differences, including China's unsatisfactory enforcement of our intellectual property rights. Two years ago, when China failed to stop massive pirating of our compact discs and videos, we threatened 100 percent or more tariffs on $2 billion in Chinese exports. China agreed to take decisive action--and it did, closing 15 illegal CD factories in 1996 and several more in recent months.

China is the fastest growing market in the world for our goods and services. But our growing trade deficit poses a genuine problem that China must address. The only answer is increased market access for American products. China cannot enjoy the benefit of our open market if our companies are denied the chance to compete in China. Similarly, China's admission to the World Trade Organization--which we strongly support--depends on Beijing improving its positions on market access and rule making.

We also share a strong interest in stability on the Korean peninsula. As the Cold War's last armed frontier, the DMZ remains one of the most dangerous flash points in the world. With China's cooperation, we convinced North Korea to freeze its dangerous nuclear program--and we expect the North to make good on its agreement to dismantle that program. China also has agreed to take part in the Four Party Peace Talks we proposed with South Korea to advance a lasting settlement with North Korea. As the tension of recent months reminds us, the Korean peninsula remains volatile--and it remains very much in the interest of both China and the United States to use the influence we both have wisely.
Finally, we can't secure a healthy global environment if we lock a quarter of the world's population out of the effort to protect it. What comes out of a smokestack or goes into the water within China's borders can do grievous damage beyond them. That's why the vice president's initiative to open a joint forum on the environment and development--announced when he visited China in March--is of such long-range significance. It opens up the prospect for real cooperation in an area where trouble in one corner of the planet can be a plague on everyone's house.

Expanding our cooperation with China does not mean subordinating our differences, including over human rights. Let me be very clear on this point, because human rights is the most difficult divide to bridge in forging a new China policy consensus. To some, we emphasize human rights too much. To others, we are not doing enough. I believe we must avoid making a false choice between human rights and engagement.

Our expectation that, over time, growing interdependence will have a liberalizing effect on China does not mean that we can let China off the hook for human rights abuses. An unshakable belief in human rights is part of who we are as Americans. Our leadership role in the world is due to the power of our example as well as to the example of our power. The Chinese ask us to respect their culture and heritage. We ask them to respect universally recognized human rights. People everywhere aspire to be treated with dignity, to give voice to their opinions, to worship freely, to control their political destinies--as events from Central America to South Africa to the Philippines powerfully demonstrate. So we will continue to speak out for human rights--and against their abuse in China. It makes a difference--by giving hope to those who carry on the fight for freedom and giving integrity to the values by which we define ourselves.

In the last six months, we again sponsored a resolution at the United Nations Human Rights Committee in Geneva focusing on human rights violations in China. Many of our allies abandoned the effort. But a lonely voice is better than no voice at all. The State Department continues to publish unvarnished reports on human rights in China. We will speak out against the arrest of dissidents and speak not only with China's leaders, but also with voices for change--from Martin Lee to the Dalai Lama. We will maintain the Tiananmen sanctions. We will work with Congress to significantly expand Radio Free Asia broadcasts to China in Mandarin. We will provide greater support for civil society and rule of law programs in China. And we will work more closely with the business community, challenging it to play its part in helping move China toward a more rules-based, transparent, accountable system.

In this effort, we need to be clear about our objectives. Change will not come overnight. And it most assuredly will not come if we isolate ourselves from China or cut off our relationship. If we fail to engage China, we will fuel the very inward-looking forces that trample human rights. But if we engage for the long haul, encouraging the evolution of the rule of law and civil society in China through contacts across borders, among people, and between governments; if markets expand and information flows; if we continue to call it as we see it when rights are suppressed, there is a far greater chance the roots of a more open society will gain strength.

Similarly, pursuing a strategic dialogue with China does not mean we are closing our eyes to the future of Hong Kong--on the contrary, it serves our interest in helping sustain freedom and prosperity for Hong Kong after its reversion to China on July 1. One thousand one hundred American companies operate in Hong Kong, making it the capital of American business in the fastest growing part of the world. It's one of the few places in Asia where we run a trade surplus. Our navy ships put in port calls 80 times a year. And it matters to us that the people of Hong Kong preserve their way of life.

The process by which the United Kingdom and China reached their reversion accord in 1984 was difficult--but the result admirable. In the Joint Declaration and Basic Law, the PRC pledged to maintain Hong Kong's autonomy, freedoms, and way of life. Living up to that pledge is as much in China's interest as it is in Hong Kong's--or in ours. First, because a dynamic, prosperous, and free Hong Kong will continue to drive growth and progress in China. Second, because the world is watching. A smooth reversion will promote China's international prestige--but handled badly, the transition will tarnish China.

As events unfold, our first responsibility is to put the transition into perspective. It does not begin nor will it end on July 1. It has been under way for 15 years and it will unfold in the months and years ahead. Hong Kong's reversion to China is a motion picture, not a snapshot. We should not prejudge the outcome--or lose interest when the cameras leave. And we should look to the people of Hong Kong in judging the transition's success.

What the people of Hong Kong expect--and what the international community has the right to expect--is that China adhere to the letter and the spirit of the Joint Declaration. We should look to see if elections for the new legislature are set soon and held freely; if freedom of speech, press, religion, and association are maintained; if the civil service continues to function professionally; if Hong Kong's courts operate without interference; if its economy remains open and market-oriented.

Finally, the third basic proposition behind our strategic dialogue is the continuing logic of the One China policy. Americans have been heartened by powerful movement toward democracy in Taiwan. We welcome it. The issue is not our support for democracy in Taiwan, but how best to sustain it.

The One China policy has worked. And it continues to be the right approach. It has allowed democracy to flourish in Taiwan and all three relationships to prosper--between the United States and the PRC, between the United States and Taiwan, and between Taiwan and the PRC. It provides the stability needed for growth. And it buttresses our conviction that the Taiwan question can only be settled by the Chinese themselves--peacefully. It would be a serious mistake for us to abandon the One China policy. And it also would be a serious mistake for either party unilaterally to undermine the prospects for a peaceful resolution to the Taiwan issue--as we made clear in sending our aircraft carriers to the region in the wake of China's provocative military exercises.

In laying out the purpose of our strategic dialogue with China and the propositions behind it, I want to end with the one development that could destroy the dialogue, do grievous injury to the interests of the United States, and shatter a new consensus on China--a vote by Congress to revoke most-favored-nation trade status for China.

The goals of the opponents to normal trading relations with China generally are ones we share--advancing human rights and religious freedom, promoting fair trade, strengthening regional and global security. But the method they have chosen--destroying our economic relations with China--is profoundly misguided.

Revoking MFN would cut off our contact with the Chinese people, not strengthen the forces for human rights. It would eliminate, not facilitate, cooperation on weapons proliferation. It would close one of the world's emerging markets to our exports. And it would drastically weaken Hong Kong--which handles over 50 percent of U.S.-China trade and depends on normal trade status--just when its economic strength is vital to ensure autonomy from Beijing. That's why Hong Kong leaders across the political spectrum, including Governor Patten, Democratic Party leader Martin Lee, and Chief Secretary Anson Chan, all favor renewal. Finally, revoking MFN would make China more isolated and less likely to play by the rules of international conduct. Treating China as our enemy could well make China our enemy.

Twenty-five years after the Shanghai Communiqué, China's isolation is giving way to international engagement, its backward economy to remarkable growth, its dying ideology to the first stirrings of change.

But the results are far from preordained: inward-looking isolation, or outward-looking integration? As we create the structures and policies that will become the foundation for security and prosperity into the new century, one of our most critical challenges is to bring China into the effort as a stakeholder--to make the choices ourselves that will make it more likely China makes the right choices.

The United States will survive and flourish even if China stays outside the international system and inside a cocoon of self-absorption and xenophobia. But our interests are far better served by increasing cooperation, avoiding chaos, and strengthening economic growth.

To succeed will require the vision to imagine a new relationship between two great powers. The courage to see it through. The confidence that universal values will prevail in China as they are around the world. The conviction that it is profoundly in America's interests to work with, not isolate ourselves from, a quarter of the world's population. That is the course this administration has chosen. But we cannot walk it alone. And so in closing, let me call on your leadership to help us rebuild a broad national consensus on China policy. A consensus that will serve America's interests and our ideals in the challenging years ahead.