Weapons of Mass Destruction (WMD)

DATE=09/26/2002

TYPE=ON THE LINE

NUMBER=1-01198

TITLE=U.S-CHINA RELATIONS

INTERNET=Yes

EDITOR=OFFICE OF POLICY 619-0037

CONTENT=

THEME: UP, HOLD UNDER AND FADE

Host: Are U-S-China relations changing? Next, On the Line.

[Music]

Host: China is preparing for it's sixteenth Communist Party Congress in November. The Party Congress is expected to anoint a new generation of leaders and set the direction of Chinese politics and policies for years to come. The Congress will take place at a time when tensions between the United States and China have eased as a result of cooperation in the war on terrorism. Chinese leader Jiang Zemin will meet with President George W. Bush October 25th at the president's ranch in Crawford, Texas. China has been criticized by the United States for selling ballistic missile technology to countries such as Iran and North Korea. In August, China announced it would restrict such sales, but has made such promises before. What is the state of U-S-China relations and will they be affected by the ongoing war on terrorism and the upcoming Party Congress? I'll ask my guests -- Gordon Chang, author of "The Coming Collapse of China;" Claude Barfield, a resident scholar at The American Enterprise Institute; and human rights activist, Dimon Liu. Welcome. Thanks for joining us today.

Gordon Chang, let me start by asking you, how has the war on terrorism affected relations between the U-S and China?

Chang: Well, as you mentioned, the two countries are getting closer. China was caught off-balance by September 11th because just a couple of days afterwards, it signed its technical agreement with the Taleban. So, clearly, it had to take some time to gather itself in its thoughts. Since then, of course, it's moved much closer to the U-S, but again it's always been off-balance in reacting to what the United States has been doing. So, generally speaking, we've had a very unusual year in U-S-China relations.

Host: Claude Barfield, is China still off-balance in how it's going to react to the war on terrorism?

Barfield: I think that's true, on the other hand, they don't seem to be, as with our European allies, as uncomfortable. There are reasons for that that we'll undoubtedly get into, with what the United States has done. I mean, they have, as I'm sure both of my co-guests will talk about, to some degree taken advantage to increase human rights depredations as a result of the alliance with the United States in relation to al-Qaida. But in general, the things that I deal mostly with in terms of international trade, international investment, I think that has not been particularly affected. And the Chinese are very much concerned and still pushing, some places with good results, some places with not such good results, to live up to the obligations that they took in the World Trade Organization. It's a mixed picture actually.

Host: Dimon Liu, one of the worries that was expressed by some in China's political class about the war on terrorism was that the United States was expanding its influence in Central Asia and Southeast Asia. And that there were some concerns that the U-S influence was growing in the region that China was hoping to have the most important influence in. Are those concerns still at the forefront of Chinese political thinking at this point?

Liu: Absolutely. You have to understand that China, in this relation with the United States, is going in two directions at the same time. On the one hand, it needs the United States, it needs its market. Because [of] the sheer size of China, the European market is not going to do it for China if it wants to continue its economic expansion. On the other hand, the philosophy of its Communist government is so fundamentally different from the United States. And currently China is a giant Enron with nuclear capability and a two-point-five million [man] army. The only reason that its economy has not collapsed is because its military might intimidates its population and impresses foreigners. So it extends its rule in China for I don't know how long, but its collapse is not a matter of if, but a matter of when.

Host: Claude Barfield, you look a lot at issues of trade and economy, is the Chinese economy being propped up by the military at this point?

Barfield: Well, there's certainly a direct connection, but I think that there is less so than before. I am not necessarily an expert on the Chinese economy, but certainly, I am also not one of those who think that China is going to be in our lifetime an emerging economic power. There are too many internal problems about the state-owned enterprises, the mess in the financial arena. And then you can not talk about this -- you can not talk about the economics without the politics. And I think it's the political economy that probably concerns people the most. I can't predict whether China is going to collapse in the next few years or not. I think the United States had better be prepared, however, for the foreseeable future, to have to deal with this regime and take things as they come. And that has to do with both the diplomatic and security situation that we face post-nine-eleven, as well as their membership in the W-T-O [World Trade Organization]. We can't control whether China will or will not collapse.

Host: Gordon Chang, you've predicted that China will collapse. What's your reason for that?

Chang: Basically because I don't think that they can take economic reform very much further. W-T-O accession really means that they agree to join the world on the world's terms. And I don't think that the state-owned enterprises and the state-owned banks are really ready to live up to those commitments.

Host: What commitments have they made that are going to be the most difficult for them to live up to?

Chang: I think the single-most difficult commitment will be that in the beginning of 2007, foreign banks will have national treatment. In other words, they will be treated the same way as the state banks. The state banks right now are terribly insolvent, carrying perhaps a half trillion U-S dollars in bad loans. Some way, between now and 2007, they have to clean up those banks. And it's a monumental task for any country, but especially one which is now facing, really, the limits of reform under the current system.

Host: Claude Barfield, are the banks the most pressing?

Barfield: I don't disagree with the banks though I would say that you have to be careful here. After all, the Japanese banks have been in chaos for a decade, but the Japanese government has managed to [get by], though I do think that that's a big weakness. I think though, I would expand it to say that both in terms of the economic consequences and ultimately the political consequences, it's the commitments that China made in the services area, and by that I mean financial services -- I mean telecommunications; I mean electronic commerce -- which are going to be, despite the recent interference with Google -- I'm sure they will intervene again -- it's just impossible. It's like [with] a finger in so many dikes, that the opening of services means that they will have to change their regulatory system in ways that they certainly had not foreseen. And I, as I say, am going to refrain from [stating an opinion]. I don't know how this will come out, but it's the biggest challenge, I think, to the government. Because that's where governments have -- whether it's the government of France, or the government of Germany -- when you're talking about your telecommunications, your information systems, infrastructure, your banking system, that's where governments have traditionally had the strongest control of populations.

Host: Dimon Liu, Claude Barfield mentions what's been going on with Google and the internet in China. What exactly has been happening there?

Liu: Well, it was President Clinton who said the internet is unsuppressible. And his phrase was it's like "nailing Jello to the wall." We have seen now that technology can be easily mastered by people who invented it and by a tyrant who uses it to suppress the people, and this is happening.

Host: What exactly is happening?

Liu: They get major American companies to help them build firewalls.

Host: And this is to build an internet firewall so that people who are using the internet in China are not able to access Web pages that have material critical of the government?

Liu: Yes. And an expert that I have talked to, internet experts that I have talked to, say that they may be able to invent new systems to stay one step ahead of the Chinese government, but ultimately they will always catch up.

Barfield: Let's hear what you just said though. "There will always be a new system ahead of the Chinese government." And Chinese are traveling. I just think that it's an impossible thing for a government, whether it's the Chinese government, the Russian government, or whatever government, to actually keep up and keep its people away from the internet. And you know, the Google, they can keep it [down] for a day or two and then a week or so -- I just think it won't be the case. This is a neutral political statement by the way.

Liu: I wish that, you know, I could be as optimistic also. I refer to a statement you made earlier when you said that the banking system is the Chinese government's biggest problem. It isn't the Chinese government's biggest problem. The reason that the banking problem is not being solved is because they have found other problems. The population is suffering tremendously. There are so many riots. Some of them are incredible sizes. And the only reason that they are not building up to a regime collapse is because there is not linkage of the protests and there is no leadership. The reason there is no leadership is because anyone who wishes to be a leader or who wishes to do any kind of organization, they get put into jail immediately.

Host: Let's talk about that just a little bit, Gordon Chang. Leading up to the sixteenth Communist Party Congress, there have been several democracy activists, long-time dissidents who have recently been jailed. Why is that going on? Is it to send a message or is it just to sort of get people out of the way before the congress?

Chang: It's basically to get people out of the way. The party has done this before various events, so before the fiftieth anniversary of the People's Republic, before the APEC [Asia-Pacific Economy Cooperation forum] meeting in Shanghai last year, before the International Olympic Committee went to Beijing, they always try to clean up society. But now of course, they're much concerned about stability and they've become quite obsessed by it. So in the months before the sixteenth Party Congress, all sorts of things have happened. People have been jailed, buildings have been painted and the kabob dealers in Beijing have been swept off the streets. It's all part of the same issue.

Host: And what's the issue?

Chang: Basically to maintain stability in the run-up to the sixteenth Party Congress. They want to make sure that nothing goes wrong in this country, so they are obsessive from the top to the bottom.

Liu: This kind of stability is not a natural stability. It's not the stability of a democracy, [in which] you get the stability from the consent of the people. This is the kind of stability that is [gotten] through sheer suppression.

[crosstalk]

Chang: They can't do this forever.

Host: What's going to happen in the congress itself, at the party congress? Claude Barfield, there's debate over whether Jiang Zemin does actually plan to entirely step aside for a new generation of leaders. What's your sense of that?

Barfield: I don't know the answer to that. Let me speak to something that I do at least know something about, or at least sense something about, and who knows of the inner sanctum of that group. And that is, at least as far as I can see -- and my colleagues can chime in here, or obviously will chime in -- there doesn't seem to be great dissent about the economic reforms. In other words, whatever one thinks that they may do, they may do well or ill, but there's no sense of going back. It seems to me that you may say this is papering, this is sort of paper, but the things that have been done, including making the private sector a bigger partner in the economy, or ultimately, there's implications that's their politics, that seems to be on track no matter whether Jiang hangs on for a year or so in the military side or not. So, that's the one thing that I see, you know, from my perspective in terms of the W-T-O and their international economic obligations, as important. And we can argue about the degree to which the Chinese economy has actually been reformed. But to the degree that the top believes in it, that seems to be at least for the moment a settled issue.

Chang: It's very interesting, though, that in the run-up to the sixteenth Party Congress, and I'm sure for at least a few months and maybe even a few years afterwards, we're not going to see much progress on reform. Even though everybody has this consensus on economic reform, because the system is so abnormal, in the run-up to the Congress, all reforms, virtually all reforms have been put on hold and what we have seen in the way of economic changes have almost been retreats -- especially in connection with the funding of the national social security system. So it's very interesting that not only are they trying to jail activists, but they have put most of their agenda on hold during this season of political transition.

Barfield: So then, isn't it true, and I'll say this as a question and then we can [talk about it]. It seems to me that what has been put in place is already eroding the state sector. And so, they are not impeding as I understand it, the creation of new enterprises that are really outside, in almost the black economy as it were, the underground economy in some degree in terms of Chinese law. So that is continuing on the basis of the political imprimatur of a decade ago, plus whatever institutional changes in terms of economic institutions as well as law and administration which have been forced by the W-T-O.

Host: Dimon Liu, is there a growing room for some economic freedoms outside of those economic areas controlled by the state in China?

Liu: Well, economic freedom is one thing, but you know for society to be stable or even progress to a consensual stability, you need political freedom. I would like to challenge the notion that economic freedom will inevitably lead to democracy, lead to more freedom. I think the contrary has been demonstrated to be the case. We look at Japan, from the Mieji era to the 1930s, Japan's economy grew sixty times. It did not lead to political freedom. It did not lead to stability of the region. In fact, it led to misery for a vast number of people, including those in the United States and the same case with Nazi Germany. It grew enormously: doubled, tripled its economy in a very short time. It did not lead to political freedom, it led to six-million dead Jews.

Host: Gordon Chang, is there reason to believe that democratic freedoms may grow out of economic freedoms, or do you agree with Dimon's view?

Chang: If you take a very long time frame, and I'm talking maybe not decades but centuries, I think that once you do open up the economy, you eventually will evolve to a more open political system. But Dimon is certainly right that in a time frame that we're familiar with, you can have economic growth really without the consequent changes in the political system. And that's what they're trying to do in China. I don't think that it will work for various reasons, but certainly that's the game plan.

Host: Let's move from the economic issues and talk about relations between China and the U-S. Gordon, there was recently the release of what's called the report of the U-S-China Security Review Commission, that is, that the U-S Congress asked to do, every now and then, reports on the state of relations politically between the U-S and China. And the report most recently found that the United States and China "have sharply contrasting world views, competing geo-strategic interests and opposing political systems. Increasing economic ties have not softened China's egregious behavior on human rights, nor changed its strategic perceptions that the U-S is its principal obstacle to growing regional influence." Would you agree with that assessment of the state of affairs between the U-S and China?

Chang: I would. The only gloss that I would put on it is really with respect to the last few words. Certainly China sees the United States as the principal obstacle to its achieving its political and diplomatic objectives. Though, of course they see the United States as a means of increasing their economy.

Host: What are it's principal objectives that the U-S might be some kind of barrier to?

Chang: First of all, China wants to make sure that its territory is acknowledged to include all of the South China Sea. They have territorial claims that go onto the continental shelves of six other countries and they claim the entire area as their own. Of course the United States, throughout the world, not just the South China Sea, defends the sea-lanes and the rights of passage. So this is a very important objective for us and it's one which stands in direct contravention to Beijing's policy.

Host: Claude Barfield?

Barfield: I have colleagues who are on that commission or board and I have very mixed feelings about it. The most negative thing I can say about it is it has this "Oh my God, we've discovered something new" [approach]. That the Chinese have political and maybe even subversive in terms of our goals, diplomatic and security goals as well as economic. Well, what the hell? Every nation we face, this is nothing new. The Chinese in some ways can be said to be doing what we did against the Europeans in the nineteenth century. I'm not talking about political systems, I'm just talking about the trajectory of national power. And so, it's no great revelation to me that, yes, the Chinese are looking for ways to climb up the technological ladder. And they tie that to the military. I would say on our side, yes, we should be very careful about that. But we should not say that this is any different from what other nations do. Accepting what I just said does not mean that I wouldn't draw the line in Taiwan and draw the line in the South China Sea at some point. But don't say that there is something different about this regime versus other regimes. It's a naïve American political. These guys, this was in some ways the Republican Right and the Democratic Left, because there's some things that you haven't talked about in there that really try to drive stakes in the heart of the free-trade system, because the Democratic Left, which is also a part of that security commission, really doesn't like the World Trade Organization, doesn't like open trade.

Host: Dimon Liu, you want to respond?

Liu: Yes, to what Mr. Barfield has said. It reminds me of what the Chinese leaders believe America to be. They believe themselves [to be] extremely pragmatic. And they believe the United States government is also very pragmatic. And one of the key points about pragmatism is that it has no principles. It adopts whatever principle that can advance your current goal. In some ways, it's very efficient, but in the long run it's not necessarily the best way to govern. [crosstalk]

Barfield: We can be pragmatic and still push democratic ideals and also push one's national interests. I mean, they're very clear. I would intervene to protect Taiwan. I would resist them in the South China Sea. [crosstalk]

Liu: Well, China policy is not simply Taiwan.

Barfield: But this is not to say that -- one just doesn't stick one's head down in the South China sea. [crosstalk]

Liu: Taiwan's only twenty-million people.

Host: Well, we've only got a few seconds left. Gordon Chang, very quickly, what are going to be the main things on the table in Crawford, Texas, when Jiang Zemin visits?

Chang: It probably will remain the war on terrorism. I mean, that was true a year ago and it's true now.

Host: Which issues in the war on terrorism?

Chang: I think it's probably China's veto power at the Security Council at the U-N. That's always been a very important card China has played.

Host: Well, I wish we could have a little more conversation. There's so much more to get to, but I'm afraid we're out of time. I'd like to thank my guests -- author Gordon Chang, Claude Barfield of the American Enterprise Institute, and human rights activist Dimon Liu. For On the Line, I'm Eric Felten.