---

China in World Affairs -- U.S. Policy Choices

By Robert G. Sutter,
Senior Specialist in International Politics
Office of Senior Specialists

Congressional Research Service - 95-265

January 31, 1995

CHINA IN WORLD AFFAIRS -- U.S. POLICY CHOICES

SUMMARY

Backed by impressive economic growth and steadily increasing military power, China's international influence has grown substantially in recent years. This poses a set of U.S. policy questions markedly different than a few years ago when China's leaders appeared as an isolated and troubled regime following the suppression of pro-democracy demonstrators at Tiananmen Square in 1989.

In many important respects, Chinese leaders since the late 1970s have followed generally pragmatic policies that have integrated China's economy more closely with the rest of the world. The result has been a foreign policy seeking greater economic advantage in order to improve the material standard of living of the Chinese people and to increase support for continued Chinese communist rule. Seeking economic advantage has prompted Chinese leaders to be more flexible than in the past on differences with neighbors and to curb action disruptive to the prevailing status quo in Asian and world affairs.

Although optimists judge that China's growing economic and military power will be moderated by an ever widening web of international interdependence, skeptics suspect that greater power will allow Beijing to be more assertive in backing nationalistic, territorial or other demands. Of course, actual Chinese policy could turn out to be moderate on some issues (e.g. trade disputes) and more assertive on others (e.g. territorial disputes). Political and economic developments inside China will partly determine whether Beijing follows an accommodating or assertive foreign policy. Determinants outside China include the important role U.S. policy plays in influencing Chinese behavior.

There is general agreement in the United States that Washington should use its influence to encourage Beijing to conform to international norms, and over time to foster changes in China's economic, political and security policies compatible with U.S. interests. At the same time, there remain major differences among three general approaches followed by U.S. officials and others as to how to achieve these objectives.

As a result, U.S. policy is likely to continue to develop case-by-case, sometimes accommodating Beijing, sometimes pressing Beijing to change its policies, and sometimes working toward a fundamental change in the Chinese government system. Effective U.S. policy will probably require careful, case-by-case weighing of the importance of issues for U.S. interests, U.S. leverage over China, the position of U.S. allies and associates, and the sensitivity of the issue to the PRC.

----------

TABLE OF CONTENTS

INTRODUCTION 1

EVOLUTION OF CHINA'S ROLE IN WORLD AFFAIRS 3

Toward Greater Pragmatism In Chinese Foreign Policy,

1969-1989 4

Foreign Policy After Tiananmen 7

ASSESSMENT AND PROSPECTS 11

Internal Variables 13

External Relations 15

ROLE OF THE U.S. AND U.S. POLICY CHOICES 15

Outlook for U.S Policy 18

CHINA IN WORLD AFFAIRS -- U.S. POLICY CHOICES

INTRODUCTION

The Clinton Administration's decision in May 1994 to "delink" U.S. most-favored nation (MFN) tariff treatment for China and Beijing's authoritarian human rights practices temporarily eased but did not end the debate in the United States over China policy. Within the Clinton Administration, officials were in general agreement that the United States favored a "strong, stable, prosperous and open" China, but they continued to disagree when one U.S. Objective (e.g. Chinese economic and political openness) would come into conflict with another (e.g. stability). By the end of 1994, however, the previous wide ranging differences within the Administration were narrowed as President Clinton and his advisers pursued "engagement" with Beijing, especially in commercial and defense relations. Prominent examples of such U.S. engagement were the widely publicized visits to Beijing by Commerce Secretary Brown (September 94) and Defense Secretary Perry (October 1994).(⁽¹⁾)

Just as the Administration was settling on its China policy, the 1994 congressional elections brought forth the Republican led 104th Congress. Observers judged that the Republican congressional leaders seemed more likely than their predecessors to question the Administration's emphasis on "engagement" and to adopt more assertive U.S. policies vis-a-vis Beijing on such sensitive issues as Taiwan, Tibet, arms proliferation and human rights.(⁽²⁾)

U.S. policymakers seek an appropriate U.S. strategy to deal with China's growing role in world affairs. Backed by its impressive economic growth and rapid ascendancy in international trade and investment, Beijing's international influence has grown markedly in recent years. The People's Republic of China (PRC) bears little resemblance to the seemingly isolated regime that suppressed with force pro-democracy demonstrations in Chinese cities in 1989. Chinese officials have been successful in boosting Beijing's stature with all of their neighbors. Western powers compete avidly for economic opportunities on the mainland.

Many in Asia and abroad are suspicious of Beijing's steadily increasing defense expenditures and its sometimes assertive, nationalistic rhetoric and other actions over contested territory or other issues. China's defense buildup seems particularly disturbing because unlike in the past when either the U.S. or USSR used military-backed power to help to "contain" China, there is no such superpower effort to confront China's emerging power today. Of course, the United States remains militarily active in East Asia and many regional states (e.g. Japan, India, the Koreas, Vietnam, Indonesia) have important military power of their own. China's neighbors and major trading partners have not allowed their sometimes deep-seated anxiety over the Chinese defense buildup to impede the smooth development of relations with the communist authorities in Beijing. In general, they are encouraged by Chinese foreign policy behavior in the post-Mao era which has been markedly more pragmatic than in the past. They also tend to expect, wisely or not, that China's rapidly increasing economic interaction with others will promote greater social, and perhaps eventually political, pluralism at home and a greater sense of economic interdependence abroad.(⁽³⁾)

To assist U.S. policymakers as they decide on an appropriate U.S. strategy regarding China's role in world affairs, this report:

o Reviews the evolution of Chinese foreign policy.

o Assesses the prospects of Beijing's foreign policy over the next 5-10 years.

o Examines the role the U.S. plays in China's foreign policy and options for the U.S. to use that role to move Chinese behavior in directions favored by the United States.

[For those already familiar with or not interested in the evolution of Chinese foreign policy, please turn directly to "Assessment and Prospects on page 11.]

EVOLUTION OF CHINA'S ROLE IN WORLD AFFAIRS(⁽⁴⁾)

Under the leadership of Mao Zedong, China executed some wide swings in foreign policy behavior. During the 1960s, Mao charted a pro-Soviet, anti-U.S. foreign approach; in the 1960s, China shifted to a posture antagonistic to both superpowers; and in the 1970s, Mao sanctioned a realigning of China toward a rapprochement with the United States in opposition to perceived Soviet expansion. Throughout this period, Chinese leaders under Mao mixed hard and soft tactics in foreign affairs in ways that showed a strong willingness to threaten or use force in order to seek advantage or to respond to perceived encroachment or pressure from outside. China cultivated the image of an aggrieved "have not" power determined to struggle to change the world--at least over a period of time. Beijing supported revolutionary political movements and gave arms and training to radical

insurgencies directed against established governments.

Outside analysts were able to discern core goals in Chinese foreign policy notably involving support for the security of the Chinese state and its Communist Party leadership; development of China's wealth and power; and China's strong desire to stand strong and independent in world affairs. Nevertheless, the frequent shifts in priorities and tactics sometimes caught Chinese leaders unaware or unresponsive, leading to leadership confusion and conflict. Domestic politics would on occasion spill over into Chinese foreign policy, leading to sometimes serious leadership foreign policy debates. Perhaps the most graphic example of the latter occurred in the mid-late 1960s; during the most violent phase of the Cultural Revolution. This period saw a collapse of Chinese foreign policy, amid a broader collapse of Chinese government and party institutions, reflecting the life-and-death struggle for power then underway among the senior leaders in China.

The internal chaos of this stage of the Cultural Revolution was matched by the bankruptcy of Maoism in foreign affairs. Chinese stridency had alienated Beijing from most foreign support while placing it in direct opposition to the United States, then deepening its military involvement in Indochina; and the USSR, then building its military power along China's northern border as a defense and possible lever to press China. The 1969 Sino-Soviet border conflicts brought China to the brink. Chinese security was more endangered than at any time since the Korean War, and arguably since the establishment of the PRC.

Adroitly maneuvering to save China in this time of danger, while saving himself from leadership adversaries who ultimately perished in the struggle for power at this time, Premier Zhou Enlai and close associates laid out and followed a more pragmatic, less ideologically driven plan for Chinese foreign policy. Subsequent leaders, notably Deng Xiaoping, established workable domestic development strategies that drew on market energies and served to reinforce the trend toward relative pragmatism, moderation and continuity in Chinese foreign policy behavior.

Toward Greater Pragmatism in Chinese Foreign Policy, 1969-1989

China's relationship with the superpowers and especially the Soviet Union remained at the heart of Chinese foreign policy through much of this period. In particular, Soviet power repeatedly impeded both China's efforts to expand its influence in Asian and world affairs, and its ability to secure China's broader foreign policy goals of security, independence and development.(⁽⁵⁾)

1969-1976. During this period, China was only beginning to emerge from the violent domestic conflict and international isolation caused by the Cultural Revolution. The Soviet military buildup and the Sino-Soviet border clashes prompted a major reassessment in Chinese foreign policy that focused on countering the Soviet threat to Chinese security. As the United States was pulling back militarily from Asia under terms of the Nixon doctrine, Beijing saw an opportunity to work with this former adversary against Soviet pressure in Asia.

It also used the opening to the U.S. to support China's broader effort to gain greater international recognition. The PRC entry into the UN in 1971 was a high point in this effort. The U.S.-PRC agreement in the Shanghai communique signed during President Nixon's visit to China in 1972 said that both sides opposed the efforts of a unnamed third party (the USSR) to establish "hegemonism" in Asia. Subsequently, Beijing broadened the scope of this understanding to encourage world-wide efforts to block the expansion of what China called "Soviet hegemonism." China was sharply critical of any moves by the United States or others that it perceived as efforts to accommodate Soviet

expansion.

China was generally supportive of the gradual U.S. withdrawal from Vietnam set under terms of the Paris peace accord signed in January 1973, but it was alarmed by the rapid collapse of pro-U.S. regimes in South Vietnam and Cambodia in 1975. Beijing saw a particular danger that expanding Soviet power and a unified Vietnam would fill the power vacuum left by the United States. Chinese pronouncements encouraged the United States to remain actively involved militarily, economically, and politically in Asia and pointedly warned Asian countries to beware of Soviet efforts to fill the vacuum created by the U.S. pullback.

The basis of the Sino-U.S. accommodation that emerged during this period was restricted largely to strategic factors. Because of ongoing leadership struggles, China remained unwilling to break away from Maoist development policies emphasizing Chinese "self reliance." China also remained very cautious in developing educational, cultural and technical contacts with the outside world that might be called into question by the ideologically rigid members of the so called "gang of four"--Maoist radicals who had significant influence over policy at this time.

1976-1980. The period began with the death of Mao, the purge of the Maoist "gang of four," and the rehabilitation of more pragmatic leaders led by Deng Xiaoping. Deng and his reform-minded colleagues began a major economic and political reform effort designed to end the ideological struggles of the past and to improve the material well-being of the Chinese people.(⁽⁶⁾) In foreign affairs, they broadened the basis of China's interest in contacts with the West and the rest of the developed world from continued common anti-Soviet strategic concerns to include greater economic, technical, and other exchanges.

Chinese foreign policy supported China's new quest to achieve economic modernization as effectively as possible. It did so by helping to promote economic contacts with various countries that could benefit China's modernization; and by helping to maintain a stable and secure environment in Asian and world affairs that was conducive to Chinese modernization efforts. In this context, Chinese leaders put aside past ideological, political and other constraints to beneficial economic and technical interchange with a wide range of developed and developing countries. They halted or cut back support to Maoist insurgents or political groups that would impede smooth economic exchanges abroad; cut back sharply on Chinese foreign assistance to the third world; and showed an increased willingness to softpedal past Maoist pretensions to change the world.

Chinese leaders focused their foreign policy concerns on establishing a "peaceful environment" around China's periphery in Asia. China did not control the environment, which remained more heavily influenced by the Soviet Union, the United States, their allies and associates. China continued to see the main danger of instability and adverse development in Asia coming from the Soviet Union or its allies and associates. Thus, Beijing was particularly concerned by the Soviet-Vietnamese strategic alignment that allowed Vietnam in late 1978 to invade Cambodia, overthrow the Chinese-backed Khmer Rouge regime there, and successfully resist the subsequent Chinese military incursion into Vietnam.

The economic and strategic imperatives noted above underlay China's decision to normalize diplomatic relations with the United States in 1978; the signing of the China-Japan peace treaty in 1978; and China's highly vocal effort at this time to encourage a world wide "anti-hegemony front" to contain the expansion of the Soviet Union and its proxies in Asia and elsewhere in the Third World. As it was in the previous period, Beijing was especially critical of perceived efforts by the United States or others in the West to accommodate or "appease" Soviet or Soviet-backed expansion in the interest of U.S.-Soviet arms control or other concerns. And it was supportive of a continued strong effort by the United States and its allies to maintain a firm military and diplomatic position against Soviet expansion in Asia and elsewhere.

In the 1980s, Chinese leaders were generally pleased by the strong U.S.-led international response to the Soviet invasion of Afghanistan in December 1979. The election of Ronald Reagan and the buildup of U.S. military strength in the early 1980s were seen by Beijing as complementing similarly strong efforts against Soviet expansion by U.S. allies in Europe and Asia. As a result, China came to view Soviet expansion as held in check for the first time in over a decade--a trend that Beijing judged was likely to continue to pose difficulties for a USSR leadership already preoccupied with problems including leadership succession and deepening economic malaise.

Meanwhile, Chinese leaders began to reassess their close alignment with the United States in light of candidate Reagan's strong statements of support for Taiwan. In response, Beijing opted in 1981-1982 for a more "independent" posture in foreign affairs that struck a favorable political chord in China and among Third World countries deemed important to China.

Leonid Brezhnev and subsequent Soviet leaders were unwilling to compromise in reducing Moscow's military forces around China's periphery or in reducing support for Asian countries, like Vietnam and India, that served as local counterweights to Chinese influence. In this context, Chinese leaders clearly recognized the importance of their newly developed economic ties with the United States. As a result, after two years of political crisis in U.S.-PRC relations that saw tough negotiations and public disputes with the Reagan Administration over U.S. arms sales to Taiwan and other issues, Chinese leaders set limits on China's independent foreign posture. They compromised on heretofore sensitive bilateral disputes with the United States and consolidated ties with the United States during President Reagan's visit to China in 1984. The Reagan Administration facilitated this change by increasing the flow of U.S. technology to China and by softpedaling public references to differences with Beijing over Taiwan and other issues.

In the mid-1980s, with the rise to power of Mikhail Gorbachev and his reform-minded colleagues in the Soviet Union, China and the Soviet Union moderated past differences and appeared determined to improve political, economic and other relations. Leaders of both sides focused on problems of internal economic development and related political reform, and both were interested in fostering a stable, peaceful international environment conducive to such reform. Sino-Soviet ideological, territorial, and leadership differences of the past were less important. The two sides remained divided largely over competing security interests in Asia. Gorbachev began to meet Chinese interests in this area by starting to pull back Soviet forces from Afghanistan, Mongolia, and other places around China's periphery. Concurrently, Chinese military planners began to revise China's strategic plans. They downgraded the danger of Soviet attack and allowed for a major demobilization of Chinese ground forces.

The Soviet initiatives also dulled Chinese interest in cooperating closely with the United States and its allies and associates in Asia to check possible Soviet expansion or for other reasons. China's growing need for close economic and technical ties with these countries compensated to some degree for the decline in Chinese interest in closer security ties with them. Chinese leaders also wished to improve relations with the Soviets in order to keep pace with the rapid improvement of Gorbachev's relations with the United States and Western Europe. Otherwise, Chinese leaders ran the risk of not being considered when world powers decided international issues important to China.

The United States and its allies also found the Soviet Union more accommodating of Western interests, and they were able to make greater progress than in the past in dealing with issues affecting Western security concerns. The change in Soviet policy thereby reduced the perceived U.S. need to sustain and develop close strategic cooperation with China against the USSR. Some analysts also judged that the United States saw that economic interchange with China was of insufficient importance to compensate for the reduced anti-Soviet strategic cooperation, even though China remained important for Asian security and international arms control. And, as a result, longstanding bilateral and other irritants in U.S.-China relations over human rights, treatment of intellectuals and Tibet, appeared to take on more prominence in Sino-U.S. relations.(⁽⁷⁾)

Foreign Policy After Tiananmen(⁽⁸⁾)

The sharp international reaction to China's harsh crackdown on dissent after Tiananmen caught Chinese leaders by surprise. They reportedly had expected developed countries to move relatively swiftly back to China after a few months, but they had not counted on the rapid collapse of Communism in Eastern Europe and the subsequent march toward self-determination and democratization throughout the Soviet empire, leading to the end of the USSR by 1991. Taken together, these unexpected events diverted the developed countries from returning to China with advantageous investment, assistance, and economic exchange; reduced China's strategic importance as a counterweight to the USSR; and posed the most serious challenge to the legitimacy of the Chinese Communist regime since the Cultural Revolution.

In response, Beijing used foreign affairs to demonstrate the legitimacy and prestige of its Communist leaders. High-level visits, trade and security agreements and other foreign policy means were used to enhance Beijing's image before skeptical audiences at home and abroad. As time went on, Chinese leaders managed to reestablish political stability. To do this, Chinese leaders gave higher priority to the resource needs of the military and public security forces. Meanwhile, economic growth began to accelerate sharply, especially in southern and coastal regions.

Recognizing the inability of communist ideology to support their continued monopoly of power, leaders in Beijing played up more traditional themes of Chinese nationalism to support their rule. Thus, U.S. and other criticisms of the communist system in China were portrayed not as attacks against unjust arbitrary rule but as assaults on the national integrity of China. They were equated with earlier "imperialist" pressures on China in the 19th and 20th centuries.(⁽⁹⁾)

Meanwhile, Deng Xiaoping's initiative in early 1992 forced other PRC leaders out of their hesitant approach to economic modernization after Tiananmen. Deng's call for faster growth and less impeded economic interchange with the outside world coincided with the start of an economic boom still underway on the mainland. Double digit annual growth rates caused inflation, dislocation and numerous social problems, but they clearly caught the attention of the outside world. Many of China's well-to-do neighbors like Hong Kong and Taiwan had already positioned themselves well in the post-Tiananmen period to take advantage of the rapid growth. They were followed rapidly by Western European and Japanese visitors and traders. U.S. business interest in the China market grew markedly from 1992 to 1994 and was credited with playing an important role in forcing the shift in Clinton Administration policy linking U.S. MFN treatment and China's human rights conditions.(⁽¹⁰⁾)

On specific issues in foreign affairs, Chinese leaders generally adhered to the logic underlying the pragmatic trend in Chinese foreign policy seen in the post-Mao period:

o Post-Mao Chinese communist leaders need to foster a better economic life for the people of China in order to legitimate and justify their continued monopoly of political power. These leaders cannot rely as Mao did on his enormous personal prestige as a successful revolutionary, or on the appeal of Communist ideology: they have little of Mao's prestige, and the appeal of Communist ideology is largely a thing of the past.

o China depends critically on foreign trade, and related foreign investment and assistance, for its economic development.

o China depends particularly heavily on its neighbors for aid, investment, and trade benefits, and on the United States to absorb its exports.

o Therefore, to buttress their survival politically, post-Mao leaders emphasize their concern with maintaining a"peaceful" international environment which assures continued trade, investment, and assistance flows so important to Chinese economic well being.

Thus, Chinese leaders put aside past ideas of autarky and self-reliance and allowed the Chinese economy to become increasingly integrated into the world economy. They sought to avoid dependence on any one power by encouraging broad competition. Beijing made efforts to meet the requirements of the United States and others regarding market access, intellectual property rights and other economic issues, and strove to become a member of the GATT and a founding member of the World Trade Organization (WTO). Chinese leaders duly accepted commitments and responsibilities stemming from their participation with such international economic organizations as the World Bank, the Asian Development Bank and the Asian Pacific Economic Cooperation (APEC) forum.

Chinese leaders remained sensitive on issues of national sovereignty and were less accommodating on international security issues. They did adjust to world pressure when resistance

appeared detrimental to broader Chinese concerns. Examples included Chinese cooperation with the international peace settlement in Cambodia in 1991; Beijing's willingness to join the Non-Proliferation Treaty and to halt nuclear tests by the end of 1996 under an international agreement banning nuclear tests; China's willingness to abide by terms of the Missile Technology Control Regime (MTCR) and the Chinese leaders' reportedly helpful efforts to assist the United States in reaching an agreement with North Korea in October 1994 over the latter's nuclear weapons program. Beijing also endeavored to meet international expectations on other transnational issues like policing drug traffic, curbing international terrorism, and working to avoid further degradation of the world's environment.

It is easy to exaggerate the degree of Chinese accommodation to international concerns. Beijing's continued hard line against outside criticism of Chinese political authoritarianism and poor human rights record graphically illustrates the limits of Chinese accommodation. Continued Chinese transfer of sensitive military technology or dual use equipment to Pakistan, Iran and other potential flash points is widely criticized in the United States and elsewhere. And the Chinese political and military leaders are not reluctant to use rhetorical threats or demonstrations of military force in order to intimidate and deter those in sensitive areas like Taiwan, the South China Sea and Hong Kong who are seen by Beijing as challenging its traditional territorial or nationalistic claims.(⁽¹¹⁾)

In short, Beijing has been widely seen by many of the experts consulted for this report and others as accommodating pragmatically to many international norms not because such accommodation is seen as inherently in China's interest. Rather, Beijing is said to view each issue on a case-by-case basis, calculating the costs and benefits of adherence to international norms in each case. Thus, for example, Beijing saw by 1991 that maintaining its past support for the Khmer Rouge in Cambodia would be counterproductive regarding China's broader interests in achieving a favorable peace settlement in Cambodia and solidifying closer relations with the Association of Southeast Asian Nations (ASEAN) countries, Japan and the West -- all of whom saw continued Chinese aid as a serious obstacle to peace. By the same token, the U.S.-led international moratorium on nuclear testing had reached a point in 1994 that Beijing had to announce its decision to stop nuclear testing by the end of 1996, and join a comprehensive nuclear test ban, or risk major friction in its relations with the U.S., Japan, Western Europe and Russia.

Underlying the case-by-case approach is a rising sense of nationalism among Chinese leaders. Viewing the world as a highly competitive state centered system, Chinese leaders remain deeply suspicious of multilateralism and interdependence. Rather, they tend to see the world in more traditional balance-of-power terms, and therefore argue that the current world trend is more multi-polar (i.e. a number of competing nation states) than multilateral (a system where nation states sacrifice their independence and freedom of maneuver for the sake of an interdependent international order).(⁽¹²⁾)

At bottom, Chinese suspicions of many multilateral efforts center on the role of the United States and the other developed countries. These nations are "setting the agenda" of most such multilateral regimes. They are accused of doing so to serve their own particular national interests and to give short shrift to the interests and concerns of newly emerging powers like China. As a result, many leaders in China see U.S. and other efforts to encourage or press China to conform to multilateral standards on international security, human rights and economic policies and practices as motivated at bottom by the foreign powers' fear of China's rising power, their unwillingness to fairly share power with China, and their desire to "hold down" China--to keep it weak for as long as possible.

ASSESSMENT AND PROSPECTS

The above analysis of the international behavior of the PRC in recent years suggests several key themes:

1. Chinese leaders now see the security environment around China's periphery as less likely to be disrupted by a major international power than at any time in the past. Of course, the reduced big power military threat does not preclude danger posed by possible conflicts between China and its neighbors over territorial disputes or other issues that China itself might provoke. Nor does it automatically translate into growing Chinese influence in Asia or sanguine Chinese leadership attitudes regarding the evolving balance in Asia. Regional economic and military powers (e.g., Japan, Indonesia, India) are among leaders asserting their influence as East-West and Sino-Soviet tensions have ended.

2. Regional security trends are generally compatible with China's primary concern with internal economic modernization and political stability. So long as the regional power balance remains stable and broadly favorable to Chinese interests, it will not intrude on Beijing's recent effort to give pragmatic development of advantageous economic contacts top priority in its foreign affairs. At least some leaders in Beijing appear prepared to embark on a more assertive Chinese stance in the region presumably after China has achieved solid progress in its economic modernization program.

3. Ideological and leadership disputes have less importance for Chinese foreign policy than in the past. Although Chinese leaders could be divided between more conservative officials and those who are more reformist, the differences within the leadership over foreign affairs have appeared markedly less than they were during the Maoist period.

4. Reflecting the more narrow range of foreign policy choices present among Chinese leaders, Beijing's foreign policy has become more economically dependent on other countries, especially the Western aligned, developed countries, than in the past. Particularly as a result of the new openness to foreign economic contacts and the putting aside of Maoist policies of economic self reliance, Beijing has come to see its well-being as more closely tied to continued goodrelations with important developed countries, notably Japan and the United States. They provide the assistance, technology, investment and markets China has needed to modernize effectively.

5. China's overall pragmatic adjustments in world affairs are not dependent on just one or two leaders in China. Although Deng Xiaoping picked up senior foreign policymaking duties from Mao Zedong and Zhou Enlai, the policies followed have represented, in broad terms, an outline agreed upon among senior Chinese leaders who are advised and influenced by a wide range of experts and interest groups in China. Many of these groups have a strong interest in dealing pragmatically with worldaffairs. This has included particularly strong economic, technological and other interconnections between Chinese enterprises and interest groups and counterparts outside China. As a result, they are loathe to pursue autarkic, confrontational or provocative policies that could

jeopardize their particular concerns as well as China's economic progress in an increasingly interactive world. A substantial segment of the Chinese leadership does remain suspicious of U.S. pressure and very sensitive regarding issues of national sovereignty.

The outlook for Chinese foreign policy over the next 5 to 10 years remains uncertain. Optimists in the West tend to extrapolate from the pragmatic trends seen in Chinese foreign policy behavior since the death of Mao and the rise of pragmatic nation-building policies of Deng Xiaoping. They argue that the logic of post-Mao foreign policy will continue to drive Chinese leaders in directions of greater cooperation, accommodation and interdependence with the outside world, and especially China's neighbors and the advanced developed countries led by the United States. According to this view, as China becomes economically more advanced, it will undergo social and eventually political transformation, that will result in a more pluralistic political decision-making process in Beijing that will act to check assertive or aggressive Chinese foreign actions or tendencies. Moreover, as Beijing becomes more economically interdependent on those around China and the advanced developing countries, it will presumably be less inclined to take aggressive or disruptive actions against them.(⁽¹³⁾)

Pessimists in the U.S. and elsewhere in the West are more inclined to focus on the strong nationalistic ambitions and intentions of the Chinese leaders. They are often struck by the strong nationalistic views of at least a segment of PRC leaders in the past two years who voice deep suspicion of U.S. pressures directed against China. These Chinese leaders see these U.S. pressures and other U.S. policies, such as support for Taiwan, as fundamental challenges to China that must be confronted and resisted.

In the past, Chinese nationalistic ambitions ran up against, and were held in check by U.S.-backed military containment or Soviet-backed military containment. Later, Beijing's need for advantageous foreign economic interchange to support economic development at home, and thereby legitimate continued communist rule in China, caused it to curb assertive, nationalistic behavior abroad. But the pessimists believe that Beijing has now or will soon reach a point of economic development where it will no longer need to cater so much to outside concerns. For example, the government in Beijing may have reinforced its political legitimacy by its record of material progress in recent years. And China's economy has become such a magnet for foreign attention that the Sino-foreign tables could be reversed -- that is, foreign countries now will feel an increasing need to accommodate China or risk being closed out of the booming China market, rather than China feeling a need to accommodate foreign interests.(⁽¹⁴⁾) China is now widely acknowledged as a world-class economic power and possibly a nascent superpower. None of this is unrecognized by China's leadership.

Whether China will follow the path of the optimists or pessimists, or some other future course, will depend heavily on two sets of factors.

1. Internal--political stability and the course of economic and political performance;

2. External--the interaction of Chinese relations with key states around its periphery and Chinese adjustment to international trends in the so-called "new world order."

Internal Variables

Developments inside China that could cause a shift from pragmatism to a more assertive and disruptive emphasis on nationalism in Chinese foreign policy are:

o a major economic failure or change in political leadership. These could prompt Beijing leaders to put aside their current approach to nation-building and adopt a more assertive foreign policy; this could be accompanied by harsher reactions to internal dissent and to Western influence in China;

o the achievement of such a high level of economic success and social-political stability that Chinese leaders would feel confident that China was strong enough to pursue its interests in the region and elsewhere with less regard for the reaction or concerns of other countries.

Some have argued that it might be good for Asian and world stability if China continued to make progress toward economic modernization, but failed to achieve full success.(⁽¹⁵⁾) Under these circumstances, Beijing leaders would likely continue to see their interests as best served by pursuing a moderate, conventional nation-building program. They would likely remain preoccupied with the difficulties of internal modernization and would not achieve the level of success that would allow for a more forceful policy in Asian and world affairs for some time to come.

An examination of variables governing China's development and reform efforts suggests that Beijing appears to face such future prospects. Beijing leaders are unlikely to achieve fully their current development objectives for some time because of significant economic constraints, the complications from efforts to implement proposed reforms, and leadership and political instability. Major short-term economic constraints include an inadequate transportation system, insufficient supplies of electric power, an expanding government spending deficit, money-losing state enterprises, and a shortage of trained personnel. Long-term impediments include growing population pressure, the difficulty of obtaining enough capital to develop available energy resources and general industry, and the slowdown of agricultural growth after the rapid advances in the recent past.(⁽¹⁶⁾)

Reflecting these and other important constraints, the Chinese leadership at present continues to delay some changes in prices and economic restructuring because it fears they would have serious consequences for Chinese internal stability. Such changes can trigger inflation and cause hoarding. Closing inefficient factories forces workers to change jobs and perhaps remain unemployed for a time. Decentralized economic decision-making means that local managers can use their increased power for personal benefit as well as for the common good. The result of these kinds of impediments has been a zig-zag pattern of forward movement and slowdown in economic reforms.

The problems of political stability focus on leadership succession--as principal leader Deng Xiao-ping's health slowly fades--and the difficulty Beijing has in trying to control students, workers, and others demanding greater accountability, less corruption, or other steps that would curb central

authority. The repeated political difficulties over the results of the economic reforms and political measures continue to demonstrate the volatility of politics in China.

Of course, the widely publicized difficulties of the reform efforts sometimes obscure their major accomplishments and the political support that lies behind them. Reflecting the rapid economic growth in China over the past 17 years, the constituency favoring economic reform includes representatives of coastal provinces, enterprise managers, prospering farmers, many intellectuals, and technically competent party officials. The major alternatives to current policies (e.g., Maoist self

reliance, Soviet-style central planning) have been tried in the past and have been found wanting. Some of the followers of purged party leader Zhao Ziyang provided an alternative favoring greater political as well as economic reform, but thus far no leader has emerged with a program with viable support or constituency able to lead China in a direction markedly different than the current Communist Party-led development effort. Thus, on balance, it appears likely that Beijing will remain focused on economic reform while stressing the need for political stability, even in the event of strong leadership and political disputes and economic complications in the next few years. Nevertheless, analysts are sometimes concerned about what they see as Chinese assertiveness in the post-cold war order in Asia.

External Relations

The foreign powers around China's periphery and those who have an important role to play regarding Chinese interests in international organizations, trade and global issue could influence the course of Chinese foreign policy in several ways. Some may adopt policies on issues sensitive to Beijing that would prompt Chinese leaders to subordinate pragmatic interests for the sake of protecting Chinese territorial or other national claims. Most notable in this regard are outside challenges to China's claims to disputed territories. In the case of Taiwan, for example, if the leaders in Taipei were to formally declare independence from the mainland, Beijing might be hard put not to follow through on its repeated pledge to use force to stop such a development. And in the case of disputed claims to islets in the South China Sea, Chinese naval forces could be expected to respond promptly to any effort by Vietnam or others to expand their territorial holdings by force.

On global economic issues, there is uncertainty as to how far the Chinese government will go in compromising with or retaliating against the U.S. and others unless China is allowed expeditiously to enter the WTO.(⁽¹⁷⁾) What is clear, however, is that a major shift toward protectionism among the developed countries would clearly undermine the basis of China's export-led growth. It could lead to a major shift in China's foreign policy, away from continued cooperation with the developed countries. By the same token, if foreign powers were to appear to "gang up" against China and impose sanctions because of PRC arms exports, human rights or other policies, this too might prompt a serious Chinese reevaluation of the costs and benefits of cooperation with the international status quo.

In contrast to those who argue against heavy or provocative external pressure on China are those who argue against the dangers of appeasement or weakness in the face of China's growing strength. Even those who want foreign countries to "engage" closely with China often add that this must be done from a firm position. As a recent Trilateral Commission Study concluded "a cooperative approach may not elicit a constructive Chinese response... the strength and prosperity of the Trilateral Countries -- not their weakness -- generate Chinese respect. Such classic considerations as balance of power, realism and a keen sense of Trilateral interests must also govern Western and Japanese thinking about China."(⁽¹⁸⁾)

ROLE OF THE U.S. AND U.S. POLICY CHOICES

Although the United States does not border on China, Beijing recognizes that the United States still exerts predominant strategic influence in East Asia and the Western Pacific; is a leading economic power in the region, surpassed locally only by Japan; and is one of only two world powers capable of exerting sufficient power around China's periphery to pose a tangible danger to Chinese security and development. As the world's only superpower, the United States also exerts strong influence in international financial and political institutions (e.g. the World Bank and the UN) that are very important to Beijing, and its role in particular areas sensitive to Beijing, notably policy regarding Taiwan and international human rights, is second to none.(⁽¹⁹⁾)

The pattern of international interchange with China's growing strength in recent years appears to underline the importance of the U.S. role. Few of China's neighbors are willing to challenge or express strongly different views than the PRC on major issues. They privately support a significant U.S. military presence in the region, partly because it serves as an implicit counterweight to China's military power. They and more distant developed countries also privately support firm U.S. efforts to open China's markets, end unfair commercial practices, and protect the integrity of the world trading system. And they appreciate the U.S. efforts to press China to end nuclear testing and proliferation of equipment and technology for weapons of mass destruction.(⁽²⁰⁾) Notably, however, this support is usually not expressed openly.

Beijing too sees the United States as the key link in the international balance of power affecting Chinese interests. This judgement goes far toward explaining why Chinese leaders so avidly seek a visit to China by President Clinton. It would signal to all at home and abroad that the United States has muffled its opposition to and endorses cooperation with the Beijing government. Of course, as noted above, some Chinese leaders remain deeply suspicious of U.S. motives. They believe the U.S. government is conspiring to weaken and undermine the Chinese leadership and "hold back" China from a more prominent position in world affairs.(⁽²¹⁾)

There is general agreement in the United States that Washington should use its influence in order to have Beijing conform to international norms and over time to foster changes in China's political, economic, and security systems compatible with American interests. At the same time, there is little agreement in Washington on how the United States should achieve these objectives. In general, there are three general approaches influencing current U.S. China policy and little indication as to which approach will ultimately succeed.(⁽²²⁾)

On one side is an approach favored by some in the Clinton Administration, the Congress and elsewhere who argue in favor of a moderate, less confrontational and "engaged" posture toward China. Some in this camp are concerned with perceived fundamental weaknesses in China and urge a moderate U.S. policy approach out of fear that to do otherwise could promote divisions in and a possible breakup of China with potentially disastrous consequences for U.S. interests in Asian stability and prosperity. Others are more impressed with China's growing economic and national strength and the opportunities this provides for the United States. They promote close U.S. engagement with China as the most appropriate way to guide the newly emerging power into channels of international activity compatible with American interests.

Sometimes underlying this moderate approach is a belief that trends in China are moving inexorably in the "right" direction. That is, China is becoming increasingly interdependent economically with its neighbors and the developed countries of the West, and is seen as increasingly unlikely to take disruptive action that would upset these advantageous international economic relationships. In addition, greater wealth in China is seen pushing Chinese society in directions that seem certain to develop a materially better-off, more educated and cosmopolitan populace that will over time press its government for greater representation, political pluralism and eventually democracy. Therefore, U.S. policy should seek to work ever more closely with China in order to encourage these positive long term trends.

A second, tougher approach is that of some U.S. advocates inside and out of the U.S. Government who have doubts about the interdependence argument. These U.S. policy makers and opinion leaders stress that Beijing officials still view the world as a state-centered competitive environment where interdependence counts for little and compromises sovereign strength. China's leaders are seen as determined to use whatever means at their disposal to increase China's wealth and power. At present, Beijing is seen biding its time and conforming to many international norms as it builds economic strength. Once it succeeds with economic modernization, the argument goes, Beijing will be disinclined to curb its narrow nationalistic or other ambitions out of a need for international interdependence or other concerns for world community. When strong enough, China, like other large powers in the past, will possess great capabilities and will attract no few friends or allies.

Under these circumstances, this approach encourages U.S. leaders to be more firm than moderate in dealing with China. Rather than trying to persuade Beijing of the advantages of international cooperation, the United States is advised to keep military forces as a counterweight to rising Chinese power in Asia; to remain firm in dealing with economic, arms proliferation and other disputes with China; and to work closely with traditional U.S. allies and friends along China's periphery in order to deal with any suspected assertiveness or disruption from Beijing.

A third approach is favored by some U.S. officials and others who believe that the political system in China needs to be changed first before the United States has any real hope of reaching a constructive relationship with China. Beijing's communist leaders are seen as inherently incapable of long term positive ties with the United States. U.S. policy should focus on mechanisms to change China from within while maintaining a vigilant posture to deal with disruptive Chinese foreign policy actions in Asian and world affairs. The development of an authoritarian superpower more economically competent than the USSR is not to be aided.

Outlook for U.S. Policy

Given the continued wide range of opinion in the United States over the appropriate U.S. policy toward China, it appears likely that U.S. policy will continue its recent pattern of trying to accommodate elements of all three approaches. On some issues, like linking MFN treatment and human rights, the U.S. Government has seen U.S. interests best served by an approach that meets PRC concerns. On others, like intellectual property rights protection and proliferation of missile technology, the United States Government seems prepared to threaten sanctions or to withhold benefits from Beijing until it conforms to norms acceptable to the United States. Meanwhile, although many U.S. officials would see as counterproductive any declaration by the U.S. Government that a policy goal was to change China's system of government, there is a widespread assumption that greater U.S. "engagement" will encourage such desirable changes.(23)

23. Some of those interviewed made a strong case for a carefully differentiated U.S. approach that uses sometimes hard and sometimes soft tactics, but that encouraged forward movement toward greater convergence and cooperation in U.S-China relations.

Whether the U.S. Government policy synthesis of these three tendencies is done smoothly or is accompanied by the often strident policy debates accompanying U.S. China policy decisions in recent years depends partly on U.S. leadership. In this vein, specialists interviewed for this report suggested several rules of thumb that U.S. leaders could consider when determining whether the United States should try to accommodate, confront or change China on a particular policy issue:

1. How important is the issue at hand for U.S. interests? (In general the more important U.S. interests at stake, the less accommodating and more forceful U.S. leaders should be.)

2. How does the issue at hand fit in with broader U.S. strategic interests in relation with China? (Presumably, some U.S. officials would be inclined to soft pedal relatively minor disputes with China when they are pressing for broader gains elsewhere).

3. How much leverage does the United States have over the PRC on this issue? (In general, the greater the degree of U.S. leverage, the easer it is for U.S. leaders to press for their demands.)

4. What are the attitudes of U.S. allies and associates? (If they do not support a firm U.S. stance, U.S. efforts to pressure China may be outflanked, Quixotic and counterproductive.)

5. How sensitive is the issue at hand to the PRC. (Experience has indicated that Beijing has shown less sensitivity and greater flexibility on international economic issues, and has shown more sensitivity and less flexibility on issues involving domestic political control and territorial claims. Many analysts believe that PRC leadership flexibility on sensitive issues will be restricted for a time as a result of the decline of Deng Xiaoping's health and the ongoing leadership succession struggle).

Other matters of importance in considering specific China policy issues include:

o How does the U.S. stance affect broader U.S. interests in Asian stability and international affairs?

o What is the U.S. "bottom line"? Chinese officials will press for the advantage until they find it.

o Can this matter be effectively pursued in an overall friendly and respectful atmosphere? This reduces suspicions in Beijing regarding the alleged overall hostile intent of U.S policymakers toward China -- suspicions which greatly limit PRC flexibility.

o Can this issue be pursued with the aid of U.S. allies, associates and other international leaders to create an atmosphere that would prompt Beijing to change in directions favored by the United States? (The United States used this approach in part to get Beijing to go along with international sanctions and military action against Libya and Iraq; with planned sanctions against North Korea; and with provisions of the 1991 Cambodian peace accord that were opposed by Beijing's former client, the Khmer Rouge.)

1. For background, see CRS Issue Brief 94002 U.S.-China Relations, Sutter, Robert and Dumbaugh, Kerry.

2. This report benefitted from a careful review of materials on U.S. China relations appearing in the Western and Chinese press, journal articles, and interviews with over a dozen U.S. experts in and out of the U.S. Government. Those consulted for the project who can be mentioned by name include A. Doak Barnett, Richard Bush, Thomas Elmore, Banning Garrett, Bonnie Glaser, Paul Godwin, Robert Kapp, Donald Keyser, Thomas McNaugher, Ronald Montaperto, Roxane Sismanidis and Ming Zhang.

3. See, among others, Sutter, Robert, et. al., China As A Security Concern In Asia, CRS Report 95-46S, December 22, 1994, 26 p.

4. Among the many useful reviews of Chinese foreign policy and behavior in this period see Barnett, A. Doak, China and the Major Powers in East Asia, Brookings, 1977; Harding, Harry (ed.), China's Foreign Relations in the 1980s, Yale, 1984; Dreyer, June Teufel (ed.), Chinese Defense and Foreign Policy, Paragon House, 1989; Harding, Harry, A Fragile Relationship: The United States and China Since 1972, Brookings, 1992; Kim, Samuel (ed.), China and the World, Westview, 1993; Sutter, Robert, Chinese Foreign Policy.- Developments After Mao, Praeger, 1986; Hao, Yufan and Huan, Guocang (eds.), The Chinese View of the World, Pantheon, 1989; Whiting, Allen (ed.), China's Foreign Relations, the Annals, January 1992, and Garver, John W., Foreign Relations of the People's Republic of China, Prentice Hall, 1993.

5. This analysis draws heavily from Sutter, Robert, Chinese Foreign Policy in Asia and the Sino-Soviet Summit:Background, Prospects and Implications for U.S. Policy, CRS Report 89-298F, May 15, 1989, p. 7-11.

6. The political reforms fell notably short of political pluralism or democracy as there remained strong measures to prevent dissent from emerging as a serious challenge to the regime.

7. See review in Harding, A Fragile Relationship, op. cit., p. 173-2

8. Among useful analysis of this period see Vasey, Lloyd, "China's Growing Military Power and Implications for East Asia, Pacific Forum CSIS, August 1993; Zhang, Ming, "China and Its Major Power Relations," The Journal of Contemporary China, Fall 1994; McNaugher, Thomas, "A Strong China: Is the U.S. Ready?," Brookings Review, Fall 1994; Cossa, Ralph, "China and Northeast Asia: What Lies Ahead,? Pacific Forum CSIS, February 1994; Chong-pin, Lin, "China Military Modernization: Perceptions, Progress and Prospects," Security Studies, Summer 1994; McNamara, Robert, et. al, Sino-American Military Relations: Mutual Responsibilities in the Post-Cold War Era, National Committee on U.S.-China Relations, November 1994.

9. Discussed among others at an international forum on U.S.-Chinese relations, Woodrow Wilson Center for Scholars, Washington, D.C., November 7, 1994.

10. See among others U.S.-China Relations, CRS Issue Brief 94002 (updated regularly).

11. For background, see CRS Issue Brief 92056 and CRS Report 95-46S.

12. See among others Trends of Future Sino-U.S. Relations and Policy Proposals, Institute for International Studies of Beijing Academy of Social Sciences, et. al., September 1994, and Sino-U.S. Relations: Status and Outlook--Views From Beijing, CRS memorandum, August 15, 1994.

13. Discussed, among others, in Zhang, Ming, "China and theMajor Power Relations,"The Journal of Contemporary China, Fall 1994.

14. Discussed, among others, in Chong-Pin Lin, "Chinese Military Modernization: Perceptions, Progress and Prospects," Security Studies, summer 1994.

15. Reviewed in China in Transition, CRS Report 93-1061S, December 20, 1993, 23 p. Of course, among other arguments are those that stress that an economically successful China would be very closely integrated with and dependent on the world economy, and would not be disruptive in world politics.

16. See among others CRS Issue Brief 93114.

17. Discussed, among others, in CRS Issue Brief 94002.

18. Funabashi, Yoichi, et. al., Emerging China In A World of Interdependence, Trilateral Commission, May 1994.

19. See, among others, "Trends of Future Sino-U.S.Relations," cited in note 12.

20. See sources cited in notes 8 and 18.

21. See, among others, Sino-U.S. Relations: Status and Outlook--Views From Beijing, CRS memorandum, August 15, 1994.

22. See sources noted in notes 8 and 18. This section also benefitted greatly from interviews noted in note 1.