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The National Interest
The Dragon Awakes
by Ian Bremmer
Napoleon's prediction is coming to pass: China's awakening is moving the world around it. China is building its military capacity at a pace that has Washington's attention. The added muscle allows Beijing to more aggressively pursue regional territorial interests to an extent that worries the White House. The recent heightening of tensions on both sides of the Taiwan Strait has U.S. diplomats working overtime to protect the status quo there. And Washington is becoming increasingly irritated with China's inability or unwillingness to pressure North Korea to abandon its destabilizing nuclear ambitions.
But it is China's urgent need for secure, long-term access to energy supplies and raw materials that is driving Beijing to define China's national interests much more broadly--and well beyond China's traditional sphere of influence. That dynamic is bringing U.S. and Chinese interests into conflict in unprecedented ways. It is also creating the biggest change in the strategic structure of world politics since the end of the Cold War.
In recent weeks, Washington has gone public with its worries that China's military power has become a threat to U.S. interests. Defense Secretary Donald Rumsfeld told the Senate Armed Services Committee on February 17 that he was alarmed by China's growing military capacity and the role its "dictatorial system" might play in Asian affairs. Later in the week, during his first major briefing to Congress, CIA Director Porter Goss warned that China's military buildup not only tilts the balance of power in the Taiwan Strait, it threatens U.S. forces elsewhere in East Asia. At the end of the week, a meeting of the U.S.-Japan Security Alliance, a cornerstone of U.S. national security interests in the region, focused on concerns in Washington and Tokyo that the regional military balance is shifting steadily toward China. In response, China accused both of provocation.
The "Taiwan lobby" in the U.S. Congress is also sounding an alarm. On February 16, Democrats and Republicans in the House and Senate proposed a joint resolution to resume diplomatic relations with Taiwan. The proposal would have proven political dynamite if it had any chance of passing. It did not. While the Bush Administration resolutely opposed the move as a dangerous encouragement of Taiwan's independence movement, China treated the resolution as a grave insult.
The pressure points in the Sino-U.S. Asian security relationship are well known. On-again, off-again tensions between China and Taiwan are presently on again. Despite the lack of formal diplomatic relations with Taiwan, Washington has pledged to protect the island nation from attack and to arm Taiwan, via the Taiwan Relations Act. Washington has established a clear policy on the China-Taiwan conflict: It opposes any challenge from either side to the status-quo stalemate. But the White House has had only limited success in persuading Taiwanese officials to drop threats to amend Taiwan's constitution, to change the official name of the country to reflect a move toward sovereignty, or to call for a referendum on independence from the mainland. Nor was Washington able to dissuade Beijing from going ahead with a March "anti-secession law", which provides a quasi-legal basis for invasion should Taiwan declare formal independence.
And Washington has not had much success persuading Beijing to help ratchet up pressure on its notional ally, North Korea, to open itself to the Complete Verifiable Irreversible Denuclearization (CVID) the Bush Administration demands. The Bush team has little leverage with Kim Jong-il's reclusive regime. It counts on China, North Korea's major supplier of food and energy, to press Pyongyang to renounce the nuclear brinkmanship it uses to destabilize the region and gain concessions for its ruined economy. But China's near-term interests are not perfectly aligned with Washington's. More than ongoing U.S.-North Korean tensions, China fears that a North Korean collapse would flood China's already restive Jilin and Liaoning border provinces with sick and starving North Korean refugees. Some Chinese officials also worry that a premature (in Beijing's estimation) Korean reunification might take place on American terms. Finally, because Pyongyang is well aware of Beijing's fears, Chinese leaders fear North Korea might not respond to their pressures or their entreaties.
As if China's growing military capacity weren't already worrisome, the Bush Administration was alarmed earlier this year when senior European diplomats began discussing a plan to lift Europe's embargo on the sale of weapons to China, imposed following the 1989 Tiananmen Square massacre. On a tour of Asian capitals in March, an uncharacteristically blunt Secretary of State Condoleezza Rice warned Europe more than once not to lift the ban and reminded the European media, "It is the United States--not Europe--that has defended the Pacific."
From China's point of view, the U.S. strategic position in Asia remains strong. Washington's geostrategic response to security threats emanating from the War on Terror has American troops in forward positions in Uzbekistan and Kyrgyzstan--just across the Chinese border. Washington removed the Taliban from power and has established a friendly regime in Afghanistan. U.S. relations with both Pakistan and India, China's traditional regional rival, are closer than at any point in decades. In March, the Bush Administration announced it was ready to sell F-16 fighter aircraft to both.
But most worrisome and irritating for China is the durability of the U.S.-Japanese security alliance. Washington has Tokyo's virtually unqualified support for the defense of Taiwan and for its determination to pressure North Korea. Never in modern history have China and Japan enjoyed warm relations. China knows that Japan, which boasts the world's second-largest economy, has the financial resources to become a serious military rival if it opts to shed the pacifist profile it has maintained since the end of the Second World War. Japan's deployment of its Self-Defense Forces to Iraq did not go unnoticed in Beijing. Suspicion of Japan's military intentions features prominently in Chinese official public statements.
The suspicion is mutual. In Japan's December 2004 Defense Program Outline, Japan identified China as a potential security threat for the first time. Tokyo's decision was in response to a series of military confrontations with China in disputed areas of the East China Sea. On November 10, 2004, the Japanese navy confronted a Chinese nuclear-powered submarine in Japanese waters off the Okinawa islands and chased the sub for two days. Beijing quickly apologized for the incursion, but Japan caught a Chinese research vessel in its waters soon after. China reportedly violated Japan's maritime territory 34 times in 2004, up from eight in 2003.
In other words, the security tensions Washington has worked hard to contain are building in East Asia. China's growing military capacity will only up the stakes.
These Chinese-U.S. tensions are based largely on competing short-term interests. But nearly all these issues are resolvable. The United States, China and Taiwan all hope China and Taiwan will one day peacefully reunify. And while the terms of reunification differ fundamentally in Beijing and Taipei, all recognize that military confrontation in the Taiwan Strait is in no one's interest. Washington hopes it can maintain the delicate balance it has supported for decades: a one-China policy grounded in a U.S. resolve to prevent either side from acting to upset the status quo.
Beijing would prefer an economic annexation of the island to a military one. As China's economy grows, Taiwan's appears to be slowing. More than a million Taiwanese have migrated to the mainland to make money, and they have invested an estimated $100 billion of capital there. China's strategy is to facilitate this movement. China doesn't need capital from anywhere these days; the nation is swimming in cash. But they continue to do everything possible to pull investment dollars away from Taiwan, because they believe economic ties will eventually bind Taiwan to the mainland.
Taiwan's leaders believe Taiwanese democracy will outlast the mainland's anachronistic political structure and that reunification will only come once China has become a democracy. In the meantime, most Taiwanese want to avoid unnecessary confrontation with the mainland. They have confidence that their lobbying power in Washington guarantees their security.
In other words, both sides believe it is in everyone's interests to manage tension and to ensure neither side ever gets so close to the brink of an all-out conflict they can't pull back. This shared understanding prevents Taiwan from becoming an issue that should ever pit China and the United States directly against one another.
Nor does anyone in Washington or East Asia want a nuclear exchange on the Korean Peninsula--especially not the bellicose North Korean leadership, whose very existence depends on avoiding one. China's short-term interests do not align completely with America's, but both sides know a nuclear-arms race in East Asia is bad for everyone. All sides understand that Kim Jong-il stirs up trouble only to gain the necessary concessions to keep North Korea on life support. All sides know that Kim is a rational, if somewhat peculiar, strategist. Beijing knows as well as Washington that Kim's primary goal is to preserve North Korea long enough for one of his children to inherit it. China chooses to cope with Kim's pot-stirring, while Washington prefers a more comprehensive resolution to the threat of a nuclear Korean peninsula. But their long-term interests are the same: All want sustainable stability.
Even the eventual lifting of the European arms embargo on China need not seriously undermine U.S.-Chinese relations. Washington knows that France and Germany will manage one day soon to have the ban lifted. Whether the 16-year-old embargo falls in 2005 or 2006, Washington knows it will fall. In the meantime, if Washington complains about it loudly enough, it can win concessions from European leaders anxious to keep transatlantic relations on the upward trajectory that both sides have worked to sustain since President Bush's re-election. Washington hopes that the European embargo will continue on the most sensitive, high-tech weapons systems. And Washington will continue to arm China's neighbors to prevent the regional military balance from tipping too far toward the People's Republic. The end of the embargo need not undermine U.S.-Chinese cooperation on a range of important issues.
Yet, tensions between the United States and China are on the point of producing lasting political conflict. This fight is not simply one of traditional balance-of-power politics. The real sources of friction between Washington and Beijing are found in the security implications for the United States of China's growing need for secure access to steady supplies of energy and raw materials. Energy demand is drawing China into deeper political involvement in politically volatile regions in which the United States has, since the end of the Cold War, enjoyed a near monopoly on international influence--in Africa, the Middle East and Latin America. And Washington is not happy about it.
The conventional wisdom--put forward by China itself--is that China never entangles itself in international disputes that do not directly threaten China's national interest. The Chinese have never sought the kind of global influence that the British, Russians, Japanese, French or Americans have. But it would be shortsighted to assume that the new China will be bound by its history, particularly now that China's national interest demands that it scour the globe in search of new energy suppliers.
The numbers tell the story. China has 21 percent of the world's population but only 1.8 percent of the world's oil supply. Thirty percent of China's domestic oil reserves are located in Xinjiang, a province in which Muslims outnumber Han Chinese and where Beijing's long-term grip on local politics is the least sure. A net importer of oil since 1993, China now buys half its daily consumption abroad. China imports twice the amount of oil it did just five years ago, and its demand for oil surged nearly 40 percent in the first half of 2004 alone. For all of 2004, China accounted for about one-third of the increase in world oil consumption. If its oil demand continues to grow at an average rate of 7 percent a year (as it has the last 15 years), China will need 21 million barrels a day by 2022--the same amount consumed today in the United States.
Chinese leaders decided years ago that future domestic political stability would be sustained by Beijing's ability to give its citizens something the Soviet Union and the Warsaw Pact nations never provided their own people: prosperity. Prosperity depends on sustained long-term economic growth, and growth depends on energy. In a world where energy supply is tightening, demand for energy access propels China into areas of the world they have never considered even minimally important to their national interests--areas where Beijing crosses paths and purposes with the United States.
Consider Iran. In November 2004, China signed a "memorandum of understanding" with Tehran, a precursor agreement for the largest energy deal in Iran's history. China agreed to buy 250 million tons of liquefied natural gas over thirty years. Iran will also export 150,000 barrels of crude oil per day to China, once Sinopec, a Chinese state-owned energy company, has developed Iran's Yadavaran field. The deal is valued at $70 billion.
Shortly thereafter, Beijing made public its opposition to any attempt by the United States to use the UN Security Council to impose sanctions on Iranian energy in response to Iran's failure to satisfy the UN's nuclear watchdog that it remains in compliance with the Nuclear Non-Proliferation Treaty. Iran has now negotiated a watered-down deal on its nuclear program with three European states, a deal Washington calls inadequate. The White House may yet push the issue to the Security Council--if only to demonstrate the UN's continuing uselessness as a forum for resolving conflict. But China's lucrative new energy deal ensures Beijing won't allow the Security Council to punish Iranian non-compliance. Because it needs the oil and gas, China has now replaced Russia as the major obstacle to effective multilateral pressure on Iran to renounce its nuclear weapons ambitions and to stop funding terrorist groups in Israel and Lebanon.
China's search for energy has also complicated Washington's efforts to stop what the White House and the United Nations have called a state-sponsored genocide in the Darfur region of Sudan. Darfur sits atop a lot of oil, and the Chinese National Petroleum Corporation holds the largest oil concession there. China whittled down U.S.-sponsored warnings to Sudan to stop the violence in Darfur, changing Security Council threats to "take further action" against Khartoum to a promise to "consider taking additional measures." The change made, China abstained on even this weakened resolution. China has also effectively separated UN resolutions on the dispatch of peacekeepers to Darfur from those intended to impose sanctions that would cut off Chinese access to Sudanese energy.
China and the United States already compete for oil in Russia. The United States wants to reduce its energy dependence on volatile countries and regions--the Persian Gulf, Venezuela, Nigeria--by building U.S.-Russian cooperative pipeline projects to move oil across Siberia to the Pacific port of Murmansk, where it can be put on tankers bound for the west coast of the United States. But China wants that oil too and is bidding on it.
China is also competing for Russian energy with Japan, a key U.S. ally and potential counter-balance to Chinese influence in East Asia. Japan imports 80 percent of its oil and has lobbied the Russian government for a 2,500-mile pipeline from Siberia to the Pacific port of Nakhodka. China, in turn, wants a 1,400-mile pipeline from Angarsk to Daqing in China's northeast Heilongjiang province. For the moment, Japan has won the argument. But China is not giving up. It has counter-proposed a branch from the Japanese pipeline to bring Russian oil to China by 2020. The direct competition for Russian oil heightens other already-tense political disputes between Beijing and Tokyo.
China's massive demand growth in key commodities focused on, but not limited to, oil and gas has also sharpened traditional political rivalries elsewhere in Asia. The recent conflicts with Japan in the East China Sea and with Vietnam in the South China Sea have further raised the security temperature. The southern part of the South China Sea contains considerable reserves of oil and gas. There may also be energy deposits in the disputed Spratly Islands. Conflicts among China, Japan, South Korea and Taiwan over sovereignty in these areas are not new. But they are intensifying as China's military assertiveness grows almost as quickly as its demand for oil and gas.
China is even making its economic presence felt in the American hemisphere. Sinopec has expressed interest in investing in oilsands in western Canada. China Minmetals has bid to acquire the Toronto-based nickel-mining company Noranda. In South America, the 2004 APEC summit in Chile focused attention on the fact that more Chilean exports are now destined for China than for the United States. China has signed energy-exploration deals with Argentina, trade pacts with Brazil, and is expanding its commercial relationships throughout Latin America, considered an American sphere of influence since the Monroe Doctrine.
Under an agreement reached last month, Chinese companies will gain development rights to 15 oil fields in eastern Venezuela. Chinese energy dependence gives Venezuelan President Hugo Chavez a little more credibility when he threatens to cut oil exports to the United States. And while China does not have the necessary refinery capacity for Venezuelan heavy crude, Chavez has announced that he may allow China to build refineries in Venezuela. Washington is not overly concerned that Venezuela, its fourth-largest supplier of oil, will really cut America off. But U.S. annoyance at China's indirect involvement in disputes between Washington and Caracas adds to the rising anti-Chinese rhetoric in the U.S. Congress.
It is not simply the more intense competition in America's backyard that concerns Washington. China now views energy resources strategically and often pays more than fair-market price to tie them up. Beijing's willingness to pay above-market prices to secure oil access distorts the market for every nation that imports oil. And no country imports more oil than the United States.
China's search for energy in the Western Hemisphere also draws Beijing into security conflicts with Washington. In order to build relations with Venezuela, China has provided Hugo Chavez's government with military advisors and trainers. Chinese intelligence experts reportedly began operating a joint Sino-Cuban electronic-intelligence spy and warfare center on the Caribbean island in 1999. No states in the Americas have proven more hostile to U.S. interests in recent years than Venezuela and Cuba.
How can this growing U.S.-Chinese global conflict be contained? Both sides will have to accept difficult tradeoffs to protect what could be a mutually profitable Sino-U.S. political and economic partnership. The U.S.-Chinese competition is not built on the zero-sum model of the U.S.-Soviet conflict. There are, of course, winner-take-all disputes over particular issues. But the larger picture is one in which the two countries, despite the dimensions of their growing rivalry, depend on the success of the other's economy for prosperity--even for economic stability. Chinese demand is the most important stimulant for the global economic growth on which American prosperity depends. And American markets are vital for China's sustained growth.
The Chinese government holds some $180 billion in U.S. treasuries. A quick Chinese sell-off of U.S. securities could quickly raise U.S. interest rates and undercut America's productivity. And given how much of the U.S. current-account deficit comes from trade with China, a bad day on Wall Street is also a bad day in Shanghai.
If China is not compelled by its energy demand to take actions that bring Beijing into conflict with Washington, both sides win. In practical terms, this means the United States should help China become more energy efficient. If China used its energy more efficiently, China would have less need to form relationships with governments that Washington would like to contain, China would spend less for its energy, and the environment would sustain less damage as China's explosive growth continues. For the United States to expand on the decade-old U.S.-China Renewable Energy Development and Energy Efficiency Protocol to help China develop alternative sources of energy, the Bush Administration will have to put aside concerns about China's growing military power. It is not at all clear that can or should be done.
Washington could also help China develop an Asian strategic oil reserve. Without financing from the West, it could be years before China is able to stock even a ninety-day emergency supply of oil. But Washington is right to wonder whether building China's reserve capacity could fuel China's ability to sustain a long-term military conflict that would destabilize East Asia.
As China's foreign policy frustrates Washington's efforts to protect U.S. national interests, U.S. lawmakers are liable to fall back on a familiar counterstrategy: Cold War-style containment. Persuading U.S. lawmakers to put aside Cold War zero-sum thinking and see China as a potential strategic partner in the world economy is a challenge worth accepting. But that's not likely to happen as long as China remains in conflict with so many of its neighbors and undermines Washington's diplomatic and security efforts in states like Iran and Venezuela.
To blunt a growing conflict that both sides want to avoid, Washington and Beijing face a series of difficult tradeoffs. Just because accepting these tradeoffs is in the long-term interests of both nations does not guarantee either side can summon the political will to follow through. China's energy demand will continue to grow. Spare capacity is likely to come from volatile areas where Washington has clear political interests. Both sides gain short-term domestic political advantage by denouncing the actions of the other. Can the growing U.S.-China rivalry be transformed into a viable and sustainable political and economic partnership? The signs are not encouraging.