More China-US collaboration vital for region

Some reflections on relations between Beijing and Washington on the eve of the G20 Hangzhou Summit

The 2016 G20 summit will be held on 4-5 September in the Chinese city of Hangzhou. China as the host, stands ready to work with other members under the theme of building an "Innovative, Invigorated, Interconnected and Inclusive World Economy" to hold open discussions over several key priorities, namely, "breaking a new path for growth through strengthened policy coordination," "more effective and efficient global economic and financial governance," "robust international trade and investment," "inclusive and interconnected development" and "other outstanding problems that affect world economy." The summit is expected to provide indications for future international cooperation.

In Hangzhou, Chinese President Xi Jinping and US President Barack Obama will have separate meetings, which will be their eighth since 2013. And this will be Obama's last visit to China as President. So it is likely that there will be a lot of attention on what impact their meeting will have on China-US relations. Coincidentally, Hangzhou is also where the concluding part of the negotiations for the China-US Shanghai Communiqu�� took place 44 years ago, in 1972.

Can China and the US work together, through their differences, to ensure the G20 Hangzhou summit is a success?

As China and the US play critical roles in the transformation of global governance, their agreement in the following three aspects is worth watching.

First, can China and the US send clearer signals that can help world economic growth?

The establishment of the G20 mechanism itself can to some extent be credited to the joint political will of China and the US, as they closely cooperated at its founding. And the two countries continue to contribute to its advance. Emerging economies, and China in particular, have been active parties in the institutional effort to respond to the world financial chaos spread from the US and Europe after 2008.

As the Chinese ambassador to the UK when the second G20 summit was held in London during 2009, I remember the G20 leaders managed to pull together a US$1.1 trillion package of scheme to rescue international finance, credit, employment and bolster the overall economy. This was the first time China, as a developing country, participated in international financial aid and pledged to buy US$50 billion in IMF bonds. This significant step brought China onto the world stage to get involved in stabilizing global finance.

The world' economic recovery has not yet stabilized, and emerging markets have also come across serious challenges. Differences emerged among countries on how to boost growth. Some think those who can should take measures to stimulate aggregate demand. Others emphasize fiscal discipline and supply side reform as the way forward. The Western developed countries are also pursuing different monetary policies. New developments call for new consensus. The major economies' meeting in Hangzhou are expected to find consensus on how to use fiscal and monetary policies as well as structural reforms to promote "strong, sustained, and balanced growth."

Understanding between the US and China, which are the two largest economies in the world, will be at the forefront in setting the tone for the multilateral consensus needed to rebalance the global economy.

During the eighth China-US Strategic and Economic Dialogue held in Beijing in June 2016, the two sides acknowledged the importance of structural reform to the sustained economic growth of the two countries as well as the world at large. China pledged to further its supply side structural reforms while expanding domestic demand. And the US committed itself to taking full account of the spillover effect on the international financial markets, and improving policy transparency and predictability when normalizing its monetary policy.

Second, will China and the US be able to signal that they will lead the efforts to reform global governance?

One of the highlights in China-US relations in recent years is that the two countries have rapidly extended their cooperation to the global level. For example, China and the US took the lead by agreeing on emission reduction programs, which paved the way for the success of the Paris Conference on Climate Change in 2015. China and the US also jointly set up the Center of Nuclear Security Excellence in Beijing, setting a model for global nuclear security cooperation. The two countries are also working in the area of pandemic prevention by improving local public health system in African countries such as Sierra Leone. China and the US have achieved visible results in counter-terrorism, non-proliferation, anti-piracy, and drug control. They have also engaged in cooperation on hot spot issues that affect international security such as the nuclear programs of Iran and the Korean Peninsula, as well as on Afghanistan, and Sudan. Even on cyber security, where they have disagreement, the two sides have managed to establish a hot line and agreed on the guidelines to jointly fight against cybercrimes.

But China's growing role on the world stage has also raised some concerns in the US For instance, at the G20 summit in 2010, the IMF agreed to reform its quota and governance to reflect the increasing importance of emerging market economies. But the US Congress did not approve the changes until the end of 2015. In October 2015, the IMF officially agreed to include China's RMB into its benchmark SDR currency basket.

As China rose to the second largest world economy, the country has grown in its awareness and responsibilities to do more in the world, although its initiatives are mainly in the economic arena, where most of its success comes from. For example, China put forward the "Belt and Road" initiative, which is about developing a vast new economic belt, stretching towards Europe in the west and facilitating maritime cooperation to the east. This, I believe, represents a new form of international economic cooperation for the 21st century. To support this idea, China has also promoted mechanisms such as the Asian Infrastructure Investment Bank (AIIB), which should improve global financing and governance. The US, however, became uneasy and saw these initiatives as a big challenge to the dollar-led global financial system. The US administration viewed them with suspicion and objection, and even tried to dissuade its allies from supporting them. Nonetheless, as the Chinese efforts start to show positive effects, US think tanks quickly moved to adjust their views and criticized the shortsightedness of the US administration. It is possible that the US may join these efforts in the future.

During President Xi Jinping's visit to the US in September 2015, the two countries agreed to ensure an inclusive, resilient, and constantly improving international economic architecture to meet challenges now and in the future; China and the US are committed to strengthening their cooperation in the IMF, and continuing to improve the IMF's quota and governance structure. They agreed that: "for new and future institutions to be significant contributors to the international financial architecture, these institutions, like the existing international financial institutions, are to be properly structured and operated in line with the principles of professionalism, transparency, efficiency, and effectiveness, and with the existing high environmental and governance standards, recognizing that these standards continuously evolve and improve."

At the G20 Hangzhou summit, the international financial architecture, particularly the reform and development of the international monetary system, will be important subjects to be reviewed by the leaders. It is expected that the summit will achieve important outcomes regarding how to build more resilient national financial architecture, open and prudent financial systems, macro-prudential policy tools and frameworks and inclusive finance. Information coming from China and the US shows that the two sides are already engaged in thorough consultations.

China and the US need to go beyond their differences and nurture the habit for cooperation, as they are increasingly aware that although they cannot solve all global problems, without their collaboration, none will be successfully solved.

Third, can China and the US send the signal that they are willing to manage strategic differences and avoid security conflicts?

In the eight-year Obama presidency, there have been ups and downs in China-US relations, yet with joint efforts, the two countries managed to keep the relationship constructive through coordination and collaboration. The past years have seen the economic ties quickly expanding and people-to-people exchanges increasing. Even the two militaries have improved their regular dialogues and agreed upon a code of conduct for close encounters at sea or in the air. Moreover, working with China in addressing global challenges will be an important foreign policy legacy of the Obama Administration.

There are also "negative assets." The most remembered would be the Asia Pacific rebalancing strategy, which has only deepened mistrust between China and the US. It is noted in China that the American military has continuously reinforced deployment in the West Pacific, and reemphasized the exclusive military alliance system. Against this background, the US has started to take sides in the South China Sea disputes and has decided to deploy the THAAD anti-missile system in South Korea. The US is also perceived to be condoning Japan's move toward "military normalization," which is aimed at moving away from the post-WWII rules. All these signals are strategically important and will influence the perception and judgment of the US, with many in China have growing doubts about America's intentions.

In the past four years, President Xi Jinping and President Obama have held long and intensive meetings, on many occasions focusing on building the new model of major-country relations between China and the US and on how to overcome resistance and cultivate mutually beneficial cooperation. Although the US remains apprehensive about China's initiatives, the two sides are not far apart in their belief that China and the US should not move to confrontation or conflict and that they should pursue win-win cooperation.

As the US presidential election is approaching, China-US relations will move into a new political cycle. Consequently, the top-level strategic dialogue is all the more important and it is hoped that the China-US presidential meeting in Hangzhou will offer guidance to ensure the two countries can better manage their differences, thus paving the way for the next stage of their fruitful crucial bilateral relationship.

China and the US Need to Manage Differences over the South China Sea

Relations between China and the US in the run up to the Presidential meeting in Hangzhou have hit some rough patch caused by the South China Sea arbitration. The question is, what exactly are the two nations competing over in the area? And more importantly, can they find a mutually acceptable way to move forward? How the two countries perceive and handle these issues will define the future of the evolving situation in the South China Sea.

The US claims that its interest in the South China Sea is to ensure freedom of navigation. Indeed, critical shipping lanes run through the area, and keeping them open is important to all countries. China, a major global trading power, attaches no less importance to freedom of navigation than the US does, perhaps even more.

Obviously, however, that's not all the US is concerned about. Its worry is mainly about preserving freedom of navigation for naval warships and other non-commercial vessels. Here, admittedly, there's a gap between how China and the US each interpret the relevant provisions in the the United Nations Convention on the Law of the Sea (UNCLOS), as well as corresponding customary rules of international law.

In particular, the two sides have significant differing views on the kind of military activities allowed within another country's 200-mile exclusive economic zone, or EEZ. China, as a developing country, highly values its national sovereignty and security. It holds that under UNCLOS, the principle of freedom of navigation shouldn't be used to undermine the security of coastal countries, and that military activities in a country's EEZ should be under certain constraints. On the other hand, the US, as global maritime power, has traditionally believed that its military is entitled to absolute freedom of navigation in other countries' EEZs, including oceanographic surveying, surveillance and military exercises.

Now, just as there's no dispute over allowing freedom of navigation for commercial ships in the South China Sea, there's no reason why the two sides couldn't also wisely manage their differences over the rules for naval vessels. What the US really wants, though, goes beyond its expressed concerns.

In fact, the US views frictions with China from a geo-strategic perspective, seeing the South China Sea dispute as a test of which power will predominate in the Asia Pacific. Ever since US leaders started talking about a "pivot" or "rebalance" to Asia, they've worked under the assumption that a stronger China will inevitably pursue expansionism--and thus needs to be countered by the US and its allies.

Against this background, any move by China naturally looks like an attempt to weaken US strategic primacy in the region. And at the same time, American rhetoric and activities clearly targeted at China are bound to trigger a strong Chinese reaction. Given such a "security dilemma," the risk of escalated China-US confrontation or even conflict is becoming increasingly serious and the international community are more worried about the possible geo-competition between the two countries, which also calls China to pay attention to and avoid.

The recent Arbitration ruling in the case brought by the Philippines against China has aroused strong rhetorical reaction in China, which is not opposed to the UNCLOS, or even to arbitration as a means of dispute settlement, but simply to the way this particular tribunal was constituted and chose to rule, which has been perceived as an abuse of power. Hopefully, given the fierce debate over the tribunal's verdict, people in the region will again see the wisdom of dealing with such issues through friendly dialogue rather than confrontational means.

The countries bordering the South China Sea surely appreciate that tension stands in the way of regional integration and economic cooperation, to no one's benefit. Both China and the ASEAN countries hope that this page can be turned, so that tranquility can return to the region. Recently, Philippine President Rodrigo Duterte appointed former President Fidel Ramos as a special envoy to China for an ice-breaking trip. When I was invited to meet with Mr. Ramos privately in Hong Kong, I clearly sensed the new Philippine administration's willingness to improve relations and re-launch cooperation with China. China and the Philippines are both Asian countries and I believe that as long as there is good faith, it's not beyond our reach to find ways to overcome difficulties and restore a relationship marked by friendship and cooperation.

Whether the South China Sea remains peaceful is, however, to a large extent dependent on how the US and China choose to interact with each other. Specifically, when China's sovereignty and maritime are deemed to conflict with what the US sees as its core national interests, it is vital that the two countries read the situation accurately, be clear about the stakes and find an appropriate angle from which each other's positions can be appreciated.

There's room for both China and the US to manage their relations better. The US lacks experience in dealing with powers that are "neither ally nor foe," while China has never interacted with the world's super power from a position of strength. Both sides are still exploring, and what they say and do will shape each other's opinion and actions. They both need to remain humble, keep learning and avoid simply resorting to old beliefs and behavior.

The South China Sea is too vast to be controlled by any single country. Any attempt to build an exclusive sphere of influence may lead to possible confrontation and even military conflict. The only way forward is to seek coexistence and an overall harmonization of power, interests and rules.

China is the biggest coastal state bordering the South China Sea. It has sovereignty over the Nansha (also known as the Spratly) archipelago and controls several islands and reefs there. It's only fair that China is entitled to legitimate maritime rights and interests in the area. The US should respect these and shouldn't hamper efforts by China and the neighboring countries to seek peaceful ways to address their differences.

In the meantime, China and the US must continue to pursue meaningful dialogue, based on a shared commitment to ensure the maintenance of peace, security and unimpeded access to shipping lanes in the South China Sea. The best way to address their differences on maritime rules is by talking to one another, instead of posturing or or dangerously testing each other with their military forces. Now that both have expressed support for peaceful settlement of disputes and the two countries have also restrained their reactions, it can be hoped that China and the US can move towards taking measures to stabilize the situation. And the key is for them to have effective dialogue and prevent miss-judgment when handling specific issues, especially when their interests come into conflict.

China and the US Should Free Themselves from the "Thucydides Trap" Complex

About 2,400 years ago, the Athenian historian Thucydides wrote the great book "History of the Peloponnesian War," offering a powerful account of the rise of Athens and how "the fear that this inspired in Sparta" made war between a rising power and an established power inevitable. In 1980, American writer Herman Wouk first used the concept of the "Thucydides Trap" to warn about potential conflict between the US and the former Soviet Union. In 2012, Harvard Professor Graham Allison conducted quantitative analysis of this historical metaphor, and drew an analogy between the "Thucydides Trap" and the structural difficulties in the China-US relationship. Professor Allison and his team found that in the majority of the 16 cases in human history in which a rising power has confronted a ruling power, the result was war. Only in four cases (including the Cold War), the powers managed to handle their conflict of interests in ways other than war. This research seems to suggest that war is predestined for major countries that are going through power shift.

Last December, I had the opportunity to discuss this with Professor Allison when we were attending a forum in Singapore. I suggested that should China and the US become enemies, the future of the whole world would be altered. He fully agreed, but nevertheless, expressed concern over the possibility of war between China and the US triggered by Taiwan or the South China Sea issue, which, if either becomes true, would be a textbook case of how a rising power and a ruling power fall into the "Thucydides trap." During this forum, Professor Allison said in his speech that for the US, the preeminent geostrategic challenge of this era is not violent Islamic extremists or a resurgent Russia, it is the impact of China's ascendance, and it is an underestimation of the inherent risk in China-US relations that has increased the possibility of war.

I offered different views in my comments. I said that the effect of economic globalization, the development of international institutions, interdependence among states and nuclear deterrents all points to the fact that today's world is totally different from those of WWI, WWII and the Cold War, and it is even a further cry from the isolated small world in ancient Greece, where Athens and Sparta fought over the Aegean. The "Thucydides trap" cannot be simply transplanted from then to now. What we should consider now is how, from the heights of our modern civilization, we can use our knowledge to more wisely address the complex factors that may trigger tension, competition and conflicts between major powers.

At present, when talking about the major power security dilemma, the attention is on China and the US. It is widely acknowledged that how the two countries shape their bilateral relationship will define the general direction of the world in the 21st century.

President Xi Jinping, when speaking during his US visit in Seattle on September 22, 2015, said: "There is no such thing as the so-called Thucydides Trap in the world. But should major countries time and again make the mistakes of strategic miscalculation, they might create such traps for themselves." In their meeting in Washington later, President Obama was reported to have responded to President Xi's remarks that he didn't believe in the "Thucydides trap" where conflicts were inevitable between existing and emerging powers, and that major countries, the US and China in particular, should avoid conflicts. He also said he was confident that the US and China have the ability to manage their differences.

China is a growing power with a population four times that of the US The US is a super power that claims to "continue to lead the world for a century to come," and its difficulties with China appear to be complicated and multifaceted. For example, during the American presidential election, every candidate has tried to blame China for the US' economic problems and play up conflicts of interest between the two countries. But in the real world, difficulties in this area are not impossible to manage given the two countries' deeply integrated interests. The political differences are harder to resolve because of the US' critical attitude about China's political system. But as China has become too strong to be undermined by outside powers, the two sides should be smart enough not to challenge each other on this front. The current main concern lies with the rising trust deficit in the field of strategic security, which may lead to misjudgment on both sides and increase the possibility of confrontation and conflict. The two sides need to face the issues candidly and work to build mechanisms to prevent escalation.

A persistent concern troubling the US is that China is attempting to replace it as leader of the world order. But the question is: do China and the US have the same understanding about what the world/international order is? It's important that we tease out what exactly our differences are and how to disentangle them.

What the US strives to preserve is a "US-led world order," which rests upon American values, its global military alliance structure and the network of international institutions centered on the United Nations.

China is excluded from this order in at least two aspects: First, China is ostracized for having a different political system; second, America's collective defense arrangements do not cover China's security interests. It also stands in contrast to China's common and cooperative security concept. What China identifies with is the international order underpinned by the purposes and principles of the UN Charter. China was among the first countries to put its signature on the UN Charter, and has been one of its beneficiaries and contributors. Nonetheless, China and the US do not necessarily have completely opposing views on "order". They largely agree with each other on the world's general need for peace and development, as well as the importance of multilateral institutions with the UN at its core. Should China and the US wish to avoid sliding into the so-called Thucydides trap of a head-on clash between a rising and an established power, they'll need to create a new concept of "order" that is more inclusive and can accommodate the interests and concerns of all countries, providing a common roof for all.

The world has been witnessing sweeping economic globalization, which is creating diversified interests and structural changes. This new phenomenon also calls for China and the US to lead with reforms where they have more agreement, for example, in the economic and financial areas. The two countries should be able to take the lead to mobilize international coordination and collaboration to improve global governance and keep pace with the trend of globalization.

The post-Cold War economic globalization is characterized by the free flow of capital, technology and market factors from the traditional Western center to the periphery. The US and the West promoted and facilitated the rapid expansion of globalization, from which the emerging countries not only gained but also in return contributed with their own growth. As a result, globalization greatly boosted the expansion of human wealth, benefiting both developed and developing countries alike. But the flaws of globalization have also been increasingly felt and criticized widely for causing inequality, widening gaps and insufficient oversight in the financial systems, thus, fueling the rise of protectionism and populism.

We can regard this as the initial stage of globalization or "globalization 1.0" in its modern sense, which is not yet well regulated. There are already some developments going against the trend of globalization and regional integration. For example, East Asia integration is weakening due to friction among nations in the region; the US-led Trans-Pacific Partnership (TPP) is viewed with concerns about its lack of inclusiveness; the "Brexit" has also presented new challenges for the European Union, etc. Obviously, globalization can't be reversed and the world can't retrogress, but its flaws must be addressed. To upgrade to a "globalization 2.0" requires the concerted efforts of all countries, and in particular, for China and the US to take the leadership, in pursuit of a win-win instead of win-and-lose situation. This is also in line with the idea of building a "community of mankind."

For China in particular, it is imperative that we make ourselves better understood by the rest of the world. China has grown from a poverty-stricken country into the world's second biggest economy in a little over 30 years. Compared with the developed countries, China's modernization has been "compressed" to a degree previously unheard of. However, it is not so easy to compress progress in thinking and discourse. We in China must improve our ideas and ways of thinking faster and form a broader international vision, with more effective modes of expression and behavior. In this way, the rest of the world will be able to better appreciate our culture and the reasons why we talk and act the way we do. This will also help them to understand China's foreign policy goals as we move into a new era with China inevitably playing a major role in global affairs.

The author is chairperson of Foreign Affairs Committee of China's National People's Congress; chairperson of Academic Committee of China's Institute of International Strategy, Chinese Academy of Social Sciences and specially-invited vice-chairperson of China Center for International Economic Exchanges.