Frank Frost
Foreign Affairs, Defence and Trade Group
Major Issues
Introduction
The United States and China after the Cold
War
Bilateral and multi-lateral issues
Developments since March 1996
Australia's interests
Conclusion
Endnotes
The relationship between the United States and China is one of
the most important in the post Cold War international environment,
but the two countries have not maintained harmony or confidence in
their relationship in the 1990s. Discord has risen since the
Tiananmen massacre in 1989 and has increased markedly since mid
1995, particularly over the longstanding issue of Taiwan. In March
1996, the military exercises conducted by China during Taiwan's
presidential election campaign, and the dispatch by the US of two
carrier groups to stand by near Taiwan, caused unease and some
alarm in East Asia.
Australia has a vital stake in the progress of US-China
relations. The sensitivities evident in Australia's own relations
with China in 1996 (over issues including Taiwan, the impending
visit of the Dalai Lama and the AUSMIN meetings in July) have
illustrated the potential for tensions in US-China relations to
affect Australia's policy interests. This paper provides a concise
evaluation of these issues.
The paper suggests that two major factors have fuelled the
difficulties experienced between the US and China: firstly, the
conjunction of dynamic economic growth and political uncertainty in
China itself and, secondly, the impact of the end of the Cold
War.
China's economic growth has brought benefits to most Chinese but
has also been accompanied by stresses on China's administrative and
political system. With the decline of Communism as a credible
ideology, China's regime has placed increasing emphasis on
nationalism as a basis for its legitimacy. The decline of Cold War
tensions since the mid 1980s has helped China to broaden greatly
its foreign relations, especially with its neighbours in East Asia.
At the same time, however, China's process of political transition,
as the era of the 92 year old Deng Xiaoping draws to an end, has
caused concern that leaders competing for political succession may
be drawn towards assertive stances in foreign policy, particularly
on issues of territorial sovereignty.
Domestic developments in China and the end of the Cold War have
both changed the climate for US-China relations. In the 1990s, the
US and China have been able to cooperate in a number of areas (such
as in the negotiations to end the Cambodia conflict in 1991) but
overall, the level of trust in the relationship has declined. The
assertive attempt by the Clinton Administration in 1993 to link
continuation of China's access to normal trading status (under
'Most Favoured Nation' provisions) was rejected by China. Chinese
leaders have harboured suspicions that the US is intent on
undermining China's Communist Party regime and may be unwilling to
accept China's rise to major power status. Indeed, the levels of
suspicion involved, especially on the part of China's leaders, have
given rise to some concerns in both countries that a 'new Cold War'
might emerge, in which the US might be drawn to 'contain' China's
rising influence and power.
The climate of lack of confidence and trust clearly complicates
the handling of bilateral and multilateral issues and the US and
China must contend with five policy areas which are especially
important in their relationship. Taiwan remains
the most sensitive issue between China and the US and China's
concerns were heightened by the non-official visit to the US by
Taiwan's President Lee Teng-hui in June 1995. US-China
economic relations have been accompanied by
discord over market access, protection for intellectual property
rights and China's desire to enter the World Trade Organisation.
The US has had concerns about arms control issues,
including China's approach to nuclear non-proliferation and over
its alleged provision of arms and weapons-making materials to other
countries. China's forthcoming resumption of sovereignty in
Hong Kong in July 1997 may also see tensions arise
with the US over China's policies towards civil and political
rights of Hong Kong residents. Human rights issues
are a further ongoing source of disagreement. None of these areas
can be easily resolved and each is likely to be the focus for
further dispute.
Faced with a serious deterioration in relations by late 1995,
the US since early 1996 has moved to review its policies towards
China. National Security Advisor Anthony Lake's visit in early July
1996 was received favourably by China and may have paved the way
for further leadership meetings after the US presidential
elections. However the potential for controversy and tension in the
relationship continues.
Ongoing stress in US-China relations has significant
implications for Australia's foreign policy interests. Since 1995
the climate for Australia-China relations has been affected by the
wider tensions in US-China relations, with China showing increasing
sensitivity over Australia's non-officinal links with Taiwan. In
August 1996, China reacted critically to Australia's reaffirmation
of its allied relations with the US in the AUSMIN talks. Continuing
US-China tensions could clearly impact on Australia's bilateral and
multilateral policy goals, if for example they were to inhibit the
capacity of APEC to pursue its efforts towards regional trade
facilitation and liberalisation.
The paper concludes that the future of US-China relations cannot
be predicted with confidence. Both sides have recently taken steps
to improve management of their relations, but no immediate
breakthroughs appear likely. In the medium term, the future of the
relationship will depend both on development of an enhanced
US-China dialogue and on the process of economic and social change
and political succession in China. Improved dialogue could clearly
help increase communication and confidence in the relationship.
However, until the outcome of the process of transition in China is
clarified, Chinese foreign policy and its key bilateral
relationship with the US, are likely to continue to be a factor for
uncertainty in the Asia-Pacific region.
The United States and China have what is widely regarded as one
of the world's most important bilateral relationships. China's
rapidly growing trade with the US has played a major role in the
process of export-oriented growth which is expected to make China
the world's second largest economy within a decade. Cooperation
between the two countries is vital to the prospects for preserving
and enhancing security and economic cooperation in the Asia-Pacific
region.
However, US-China relations have recently experienced discord
and strain. China opposed bitterly the visit to the US of Taiwan's
President Lee Teng-hui in June 1995. China's military exercises in
the Taiwan Straits in early 1996 at the time of Taiwan's
presidential elections produced a sharp response from the US, which
sent two carrier groups to stand by, in one of its largest military
deployments in the East Asian region since the Vietnam war. The
tensions between the US and China have impeded communication and
dialogue between the two countries and have caused concern among
the states of East Asia. The recent tensions are also of concern to
Australia, which has substantial bilateral relationships with both
countries and which considers constructive US-China relations to be
essential to the prospects for regional cooperation, especially in
APEC.
Two major factors lie behind the difficulties between the US and
China. Firstly, while rapid economic growth in China has produced
many benefits both domestically and in the East Asian region, that
growth has been accompanied by uncertainty in Chinese politics and
in foreign policy. The ruling Communist Party has yet to resolve
the process of leadership transition as the era of Deng Xiaoping
draws to an end. In this climate of political transition and
competition, China's neighbours and international associates have
been concerned that its sensitivity on issues of territorial
sovereignty and its accompanying tendency towards assertive stances
in foreign relations will be exacerbated.
Secondly, the end of the global Cold War since the late 1980s
has affected profoundly the context of East Asian international
relations, and of US-China relations in particular. For two decades
from 1972, the US and China cooperated in many areas in the face of
a common opponent, the Soviet Union. The demise of the Soviet
Union, however, has seen the emergence of a new environment as the
US has sought to pursue a wide range of economic and strategic
interests with a Chinese government which has cooperated with the
US in many areas, but which has also been suspicious of US motives
and in disagreement with some of its policies.
The US in the 1990s has sought to pursue relations with China
under the banner of 'engagement'. However, the strain between the
US and China in the mid 1990s has led to some concerns in both
countries that a 'new Cold War' might be in prospect in East Asia,
with the US in long term conflict with the last remaining Communist
major power. Some Chinese commentaries, at both the official and
popular level, have expressed the suspicion that the US may be
unwilling to accommodate China as a major power and that it seeks
to thwart China's influence through a policy of' 'containment'. In
the wake of the stress generated during 1995 and early 1996, both
countries have moved to attempt to stabilise their relations and
improve dialogue. But significant areas of disagreement and
conflicts of interests stand in the way of lasting detente and
cooperation in US-China relations.
This paper provides a concise overview of the background to the
US-China relationship, discusses the five major ongoing areas of
contention (Taiwan, economic relations, arms control, Hong Kong,
and human rights), reviews the immediate outlook in August 1996 as
the US approaches the next presidential elections, and discusses
the implications of recent developments for Australia.
China in the 1990s: Economic Growth, Political Uncertainty
China has for many centuries had the potential to be a major
power but its international significance has been limited by its
relative isolation and then (from the early nineteenth century) by
the intervention of a series of foreign powers. With the end of
civil war in 1949, China gained an improved capacity to assert its
own foreign policy interests and its international profile rose,
especially after the People's Republic of China (PRC) replaced
Taiwan (the Republic of China) in the United Nations in 1971. Since
the late 1970s, economic reform and growth in China has raised its
profile further and increased its influence, both in East Asia and
internationally.
China's pattern of growth since 1978 has been one of the most
remarkable developments since the end of World War Two. By 1993,
the World Bank estimated that China had the world's third largest
economy but had the fastest growing economy of all. China may
become the second largest economy in the world within the next
decade. Growth has averaged 9.5 per cent annually since the late
1970s and was estimated in 1995 to have been 10.2 per cent, and
Tables 1 and 2 illustrate the trend. Economic growth has been
driven in part by extensive flows of foreign investment: China has
been the world's largest recipient of foreign investment, with
$US220 billion having been committed between 1979 and 1993. The
result of China's economic expansion has been that between 1985 and
1993 alone, its economy doubled in size: by contrast, Australia's
economy took 24 years to do the same thing (1969-1993). Since
market and export-oriented economic reforms were initiated in 1978,
China's GDP per capita has grown by 6.7 times, although it still
remains modest in international terms ($US506 by official estimates
for 1995).(1) Furthermore, China's economic growth has played a
major part in bolstering and advancing growth and dynamism in the
whole East Asian region, with which it now has extensive trade and
investment links (see Table 3).


China's continuing rapid growth has led many observers to
conclude that it is heading for the status of a superpower in the
next century. However, China continues to face some challenges in
maintaining its recent pace of economic modernisation and expansion
and of coping with the changes which this growth is bringing.
China's limited capacities in education, for example, pose
substantial obstacles to development. China has only about 2.5
million students enrolled in tertiary education (out of a
population of 1.2 billion) and only about 7 million tertiary
graduates overall. These limited numbers constrain China's
capacities in economic and public sector management.
China also faces significant problems of inequalities in
development as many coastal areas have expanded much faster than
much of the countryside. This inequality has stimulated a pattern
of mass migration of up to 150 million people from rural areas to
the cities in search of work and opportunities. While many people
have found work, there has also been a rise in crime and other
social problems.(2) The urban economy is also threatened by the
large array of inefficient state owned enterprises. These absorb
subsidies which amount to about one third of budgetary expenditure,
but they cannot be allowed to be bankrupted for fear of throwing
about 100 million workers out of a job. In the absence of an
effective legal structure and with high rates of growth straining
administrative capacities, corruption has become a problem so
severe that state and party leader Jiang Zemin has warned that if
unchecked it could bring the regime down.(3)

Rapid economic growth in China has also been occurring at a time
of uncertainty for the ruling Chinese Communist Party (CCP) regime,
which has had to contend with the declining international and
domestic credibility of Communism as an ideology and with the
impending leadership transition after Deng Xiaoping (who is 92
years old) departs from the political scene. The collapse of the
Soviet Union and of the Communist regimes in Eastern Europe between
1989 and 1991 startled the leaders of the CCP. With China left as
the only Communist-ruled major power, China's rulers have been
suspicious that Western countries and particularly the United
States are keen to see Communism overturned in China as well. The
Party's authority has been under strain within China, partly
because of the suppression of dissent in Tiananmen Square in June
1989 (in which at least one hundred demonstrators died) and because
the process of economic reform has made the party less relevant in
the day to day lives of China's people.(4)
The decline in the authority of Communism has been accompanied
by a heightened emphasis by the ruling party on nationalism. This
has been reflected in both official comments and in popular
discussion and has included emphasis on the abuses suffered by
China in the past at the hands of intervening foreign powers and on
the need for China to protect its territorial sovereignty.
Nationalist feelings have been fuelled by incidences in which
Chinese feel that their country has not received the respect and
recognition it deserves: the rejection in 1993 of China's bid to
hold the Olympics in the year 2000 has been the most significant
recent catalyst for these reactions. In a recent article, Nayan
Chanda and Karl Huus have argued that:
The Chinese regime left ideologically
bereft by the global collapse of communism, has taken refuge in
nationalism to shore up its power. Its main goal may be to hold the
country together during its rapid, turbulent transformation. Yet
the implications are worrying. Dissidents see nationalism wielded
as a new tool of repression, and foreign businessmen sense an
anti-foreign backlash in investment policy. On issues ranging from
Tibet to Taiwan and Hong Kong, meanwhile, rising nationalism can
only translate into an even tougher Chinese line.(5)
The process of internal change in China, together with the end
of the Cold War, have had a profound impact on China's foreign
policy. With its economy increasingly open to foreign investment
and trade, the Chinese government has been keen to stabilise and
broaden the country's international relationships. The decline of
Cold War tensions has facilitated this process greatly. Since the
mid to late 1980s China has improved relations with all of its
neighbours and with many other countries internationally. China has
widened economic relations with Japan (although many suspicions
about Japan remain in China after the trauma of Japan's military
aggression in the 1930s) and redeveloped cooperation with the
Russian Federation. Relations with South Korea were established in
1992. China was able to establish diplomatic ties with Indonesia
and Singapore in 1990 and the Paris Agreements on Cambodia in 1991
removed that conflict as a source of serious regional tension in
Southeast Asia and facilitated normalisation with Vietnam. At the
same time, China's economic interactions with East and Southeast
Asia since the late 1970s have increased dramatically (see Table
3). All of these developments have been beneficial for both China
and the Asia-Pacific region.
However the combination of rapid growth and continuing political
uncertainty has also proved unsettling for the countries of East
Asia. China's growth has enabled it to pursue a military
modernisation program which has involved a cutback of 500 000 in
the 3 million strong armed forces. China has also pursued equipment
upgrading (partly through cooperation with Russia) and the
development of some weapons with a potential offensive capacity
(such as medium and long range missiles) although it has been
argued that the effectiveness of these programs so far has been
limited.(6) China also has territorial disputes with a number of
its neighbours. China and Japan for example, have an ongoing
dispute over the Senkaku islands. China is also in dispute with
neighbouring states over the islands and atolls of the South China
Sea. China has claimed large areas of seas surrounding the Spratly
islands: its claims are contested in whole or in part with Taiwan,
Vietnam, the Philippines, Malaysia and Brunei. China's continued
assertions of its 'incontestable sovereignty' over the area, a
claim which it reasserted in May 1996 after it ratified the United
Nations Convention on the Law of the Sea, has been viewed with
concern, especially by the members of ASEAN.(7) A further focus for
uncertainty in China's foreign policy is that its direction may be
affected by the character of the process of political succession
which emerges after Deng Xiaoping passes from the scene. The
British specialist Michael Yahuda (London School of Economics and
Political Science) has argued that a great deal depends on the
dynamics of the succession process:
The less disruptive that may be, the
more likely it is that a self-confident leadership will emerge that
would be able to pursue China's sovereignty claims with moderation
and with due regard to the wider issues that they encompass. The
more difficult the succession the more likely that a weak
leadership would respond erratically and assertively to perceived
challenges, especially if it were dependent upon the armed forces
who are imbued with more virulent nationalist sentiments.(8)
The United States and China: Cooperation and Conflict
In the post Cold War era, relations with China have emerged as
one of the most complex and problematic areas of foreign policy for
the United States. The US is an important economic partner for
China and the two countries have been able to pursue some common
interests in regional and international security but their
relationship has also been marked by conflict and suspicion.
The United States' relations with the People's Republic of China
have moved through three major phases since 1949. For over two
decades after the inauguration of the People's Republic in October
1949, the US and China viewed each other with mutual antipathy. The
US had sympathised with and supported the ousted Kuomintang regime,
refused to recognise the PRC, and continued to maintain diplomatic
relations with the KMT regime when it withdrew to Taiwan. US and
Chinese forces fought each other in the Korean war and US concern
about China's influence in Southeast Asia was a primary motivation
for its involvement in the war in Vietnam.
The concerns which the US and China both held about the policies
and influence of the Soviet Union sponsored a second phase in
relations from 1972, when President Nixon made his historic visit.
Chairman Mao Zedong told US Secretary of State Kissinger at the
time that the two countries could overcome their profound
ideological differences by working together 'against a common
bastard' - the Soviet Union.(9) Relations were normalised in 1978
and the US and China continued to cooperate through the 1980s,
particularly in opposing Soviet influence in Asia which they saw as
being advanced by Vietnam's presence (with Soviet assistance) in
Cambodia after 1979.
However the changes in Soviet policies under President Gorbachev
after 1985 and then the demise of the Soviet Union itself, created
a new strategic environment for both the US and China. For the US,
the decline and fall of the Soviet Union and its allies in Eastern
Europe was a watershed development which greatly improved the
overall security position of the US and left it as the sole
superpower. The end of the Cold War, however, also posed new
challenges for the US. The US government has had a wide range of
foreign policy interests it has wished to pursue - for example, in
promoting international security and arms control, economic
relations and human rights. But US policymakers in the post Cold
War environment have not had the Soviet challenge to act as a
pressure to help them assign priorities to the wide range of US
interests. As Michael Yahuda has observed:
Without the priorities imposed by
opposition to Soviet communism and its alleged expansion there was
no longer an agreed basis for harnessing domestic affairs to serve
long term foreign policy goals... Amid these new uncertainties
domestic forces acting primarily through Congress began to impinge
more on foreign policy, both in the parochial sense of
strengthening the pressure for protectionism and in the idealistic
sense of calling for greater priority to be given to promoting
human rights and democracy in the world.(10)
These developments have been clearly evident in US relations
with China. With the end of the Soviet Union as a common enemy, the
geopolitical logic for the US-China strategic alliance was removed
and underlying tensions and conflicts of interests, which had been
dormant during much of the 1970s and 1980s, began to emerge. A
second major catalyst for change was the massacre of dissidents in
Tiananmen Square in June 1989 which brought strong criticism from
the US along with many other countries and raised the profile in
the US of human rights issues in China.
The Bush Administration censured China after Tiananmen but also
sought to maintain a policy of communication and engagement.
However in the new post Cold War environment Bill Clinton, during
the 1992 presidential campaign, felt free to challenge the Bush
Administration on its China policies. During the campaign, Clinton
was critical of the Bush Administration for an allegedly 'soft'
position on issues including human rights and labour rights.
Clinton remarked during the campaign that it 'no longer made any
sense to play the China card' and show 'forbearance' towards
Beijing because America's Soviet opponents had 'thrown in their
hand'. Clinton accused Bush of 'coddling ageing rulers with
undisguised contempt for democracy, for human rights' and promised
that in office he would withdraw all trading privileges from China
as long as human rights abuses continued.(11)
In office from 1993, the Clinton Administration attempted to
implement its commitments by linking trade relations with China,
particularly its access to 'Most Favoured Nation' status(12), to
improvements in human rights performance. The Chinese government
predictably reacted negatively and refused to make concessions. The
administration was forced to abandon its policy in May 1994. In
1995 a second area of substantial policy disagreement emerged over
Taiwan. The decision of the Clinton Administration to allow
Taiwan's President Lee Teng-hui to make a private but highly
publicised visit in June 1995 brought a strongly critical reaction
from China, which conducted a series of missile tests near Taiwan
and cancelled a number of agreements and exchanges with the US.
By the end of 1995, in the words of the American specialist
Jonathan Pollack (RAND Corporation) '...there was neither warmth
nor trust in the bilateral relationship'.(13) The Lee visit acted
as a catalyst to underscore a series of concerns among Chinese
leaders and senior officials about the US. While there is no
uniform view among China's senior leaders about the US, David
Shambaugh (editor of the China Quarterly, writing
in late 1995) has argued that there have been widespread suspicions
among China's leadership about US intentions in the post Cold War
environment. To many Chinese leaders, he suggested:
...the United States is pursuing a
hostile policy comprised of four inter-related components. First,
it is believed that the United States is trying to contain China
strategically. Second, it is believed that the United States seeks
to frustrate China's emergence as a world economic power. Third, it
is thought that the United States wants to permanently divide
Taiwan from China, and is fuelling pro-independence sentiments on
the island. Fourth, Beijing sees evidence of a concerted policy to
destabilise and undermine the regime and communist Party rule in
China, with the intent of bringing about the collapse of the
People's Republic itself. Having disposed of the Soviet Union and
other former Communist party-states, Beijing believes that
America's cold warriors now have their sights on consigning
Communist China to the proverbial dustbin of history.(14)
In the context of the existence of reservations and suspicions
about US policies in China, the relationship has probably been
inhibited since 1993 by the relatively limited contact between
senior Chinese and US leaders. While Secretary of State Christopher
has held a number of meetings with his counterpart Qian Qichen,
President Clinton and President Jiang Zemin have had just three
occasions to meet; during the 1993 and 1994 APEC summits and in New
York in October 1995. The need for more regular dialogue at senior
levels appears to have been recognised by the US, and the relevance
of this issue is clear in the light of the range of complex policy
areas in which the two countries have disagreements.
The US-China relationship is characterised by both cooperation
and friction. China is already very deeply involved in the
international economy and has received large amounts of foreign
investment. In the Asia- Pacific region, China along with the US is
a member of both APEC, the primary vehicle for regional trade and
investment liberalisation, and the ASEAN Regional Forum, the most
important consultative body on regional security issues. Chinese
officials are also constantly involved in consultative groups in
the 'second track' of discussions on economic and political
cooperation issues. Nonetheless, the US and China have to contend
with five areas of major existing and potential conflict of
interests: Taiwan, economic relations, arms control, Hong Kong, and
human rights.
Taiwan
The status and future of Taiwan and of its relations with the
PRC have been by far the most significant recent source of China-US
tensions and are likely to continue to pose a difficult set of
problems for all three governments.
The existence of an alternative government on Taiwan claiming to
represent China was a legacy of the Chinese civil war up to 1949.
The defeated Kuomintang forces withdrew to the island in October
1949 and their administration, the Republic of China, retained
international recognition by many countries including the US. The
People's Republic, however, always maintained its right to
sovereignly over Taiwan. When the US extended recognition to the
People's Republic in 1978, it ended diplomatic recognition of the
Republic of China, withdrew its remaining military forces and
terminated the security treaty which had been in force since 1954.
However an understanding was reached that while Beijing would not
renounce the use of force against Taiwan, the US would support
Taiwan's position by continuing to sell it arms. This was followed
in April 1979 by the Taiwan Relations Act, adopted by Congress
against the wishes of President Carter, by which the US executive
government was obliged to regard any use of force against Taiwan as
a threat to the security of the Western Pacific and as of 'great
concern' to the US. The Act also committed the US to supplying
'arms of a defensive character' to Taiwan.(15) Discord between the
US and China over Taiwan was muted after the two countries pursued
their anti-Soviet strategic alliance after 1972 while the Cold War
was in progress, but has increased markedly in the 1990s.
For China's leaders the status of Taiwan is a matter of national
sovereignty which cannot be compromised. If Taiwan were to remain
separate from the mainland in the long-term, then China's power and
influence could well be seen by its leaders to be inhibited.
China's leaders have accepted as a temporary aberration the rule of
the authorities on Taiwan on the basis that reunification will
ultimately be achieved. They have seen the substantial development
of trade and investment between Taiwan and the mainland as
contributing to this long-term goal.
However these assumptions have been brought into question by the
process of change in Taiwan itself. Taiwan has become a highly
successful economy and a major source of investment in East and
Southeast Asia. Taiwan's economic status and credibility have given
it an increased international profile and it has been able to
participate in international groups including the Asian Development
Bank and APEC. Since the mid 1980s, Taiwan has also moved to adopt
a democratic political system, a process which reached a new stage
in March 1996 with the holding of the first fully competitive
national presidential elections. The government on Taiwan considers
itself to represent the whole of China and as such has not sought
to claim representation just of the territory of Taiwan. However
the Taiwan government has sought to gain increased international
acceptance of its existence so that Taiwan's economic and political
interests can be safeguarded. It has been these trends which have
made the PRC especially sensitive about the recent presidential
elections.
These developments have had important implications for US-China
relations. Taiwan's move towards a democratic system of government
has given it an additional source of credibility and popularity in
the US and especially in the US Congress. The democratic political
trends in Taiwan have clearly contrasted with those in China since
the Tiananmen massacre. Taiwan has also had a highly effective
lobbying capacity in the US Congress.
The potential for discord between the US and China over Taiwan
have been clearly evident in 1995 and 1996. In early 1995 pressures
emerged to allow President Lee Teng-hui to visit the US to accept
an honorary degree from his alma mater, Cornell
University. The Clinton Administration initially indicated
to the Chinese government that a visit would not be approved but
after almost unanimous support was given in Congress to resolutions
supporting President Lee's request, the Administration was forced
to change its position and accept the visit. China was highly
critical of the decision and took a number of retaliatory steps
including conducting a series of missile tests near Taiwan in July
and August, reversing agreements with the US on protection of
intellectual copyright and cancelling a series of exchanges and
dialogues.(16)
The lead up to the Taiwanese elections on 23 March 1996 saw
additional tension between China and the US over Taiwan. Chinese
military exercises in March in the Straits of Taiwan forced the
re-routing of major shipping and air lanes and brought regional
security issues into sharp relief. The exercises included firing of
live ammunition and of M-9 missiles close to Taiwan's major ports,
Kaohsiung and Keelung. The tactics did not succeed in intimidating
the candidates in the elections, which President Lee won
convincingly with 54 per cent of the vote. Since the main runner up
candidate opposed reunification with the mainland, about 75 pe
rcent of the electorate in effect supported maintenance of Taiwan's
autonomous status. The dispatch by the US of two aircraft carrier
groups to stand by, underscored the US geopolitical interests in
Taiwan's stability and in the success of its elections.(17)
In his inaugural address on 20 May, President Lee indicated his
wish for continued close contacts with the PRC and announced his
willingness to visit if this would assist in this. While the
situation in the Taiwan straits had stabilised by June, the
potential for discord continues. Although the US does not support a
declaration of independence by Taiwan it will not accept pressure
or what is perceived as bullying by the PRC in support of its goal
of reunification. The US would also oppose forcible reunification.
It is this US commitment to what the PRC sees as a party to an
internal dispute which provides the basis for further disagreement
and conflict.
Economic Relations
The growth of economic relations between the US and China has
been one of the most striking developments in the Asia-Pacific
region in the past decade. The US market has been very important to
China at a time when its industrial development has proceeded
rapidly (see Table 3). The US too has been able to develop
important export markets especially in certain sectors, including
commercial aircraft (symbolised by the decision of Boeing to hold
its 1996 annual general meeting in Beijing). However the rapid
integration of China into the international economy has been
accompanied by friction with the US over issues including the
balance of trade, market access for US products, Chinese policies
on protection of intellectual property rights, and China's access
to membership of the World Trade Organisation.
The development of trade has been heavily in favour of China
although the extent of the imbalance is in dispute. US Department
of Commerce figures calculate China's exports to the US in 1995 at
$US45.8 billion and imports at $US11.8 billion. However the US
counts goods transhipped through Hong Kong while China does not;
China argues that its exports to the US in 1995 amounted to $US24.7
billion.(18)
Whatever the precise figures, while both the US government and
business have welcomed the increased trade between the two
countries, the US has also been highly concerned by the issue of
market access for its goods and protection of intellectual property
rights. In a speech in Hong Kong in November 1995, US Deputy Trade
Representative, Charlene Barshefsky, said that market access
remained a key stumbling block to improved US-China relations:
China continues to maintain one of
the most protectionist trade regimes in the world. While the US
accepts 40 per cent of China's exports, China accounts for less
than 2 per cent of US exports. China blocks access to its markets
for many US goods, especially capital goods, limits investment
opportunity and discriminates against foreign business. In areas of
increasing comparative advantage, especially services, China keeps
its markets closed while Chinese companies scramble to monopolise
it.(19)
One key focus for dispute has been US concern over lack of
protection for the intellectual copyright held by US corporations.
Tensions over alleged 'pirating' of US-owned computer software and
recordings have been longstanding. The US and China concluded an
agreement on protection for intellectual property in February 1995
but after the dispute over President Lee's visit in June, China
reversed some of the actions it had taken through the agreement;
for example, a number of pirate compact disc factories which had
been closed were allowed to reopen. Continuing concerns by the
relevant US industries over the issue resulted in a US threat in
early 1996 to impose sanctions on a range of Chinese goods About 90
per cent of the tens of millions of compact discs which China
produces annually are estimated to be pirated. After intense
negotiations an agreement was reached on 17 June 1996 by which the
US withdrew the threatened sanctions in return for Chinese
commitments to close a number of pirate factories, impose other
controls, and increase access for foreign producers of sound
recordings. While the agreement was seen as a valuable step forward
by US negotiators it is unlikely to have resolved the vexed issues
involved particularly because in the very rapidly growing coastal
regions of China, the central government cannot easily control the
operations of individual enterprises who enjoy the support and
involvement of local authorities.(20)
Issues of market access are also crucial in the attitude of the
US to China's desire to join the World Trade Organisation. To join
the WTO a signatory must agree to uphold the basic requirements of
membership: transparency of the trade regime, and uniform,
non-discriminatory applications of trade rules and treatment for
goods and, to a more limited extent, services providers. Many
countries have encountered difficulties in these areas in trade
with China. The substantial differences in rates of development in
different regions of China also raises the question of whether
China should be allowed to join the WTO as a developing country, as
China's government demands, or as a country considered to be
already developed. The US has pressed China for a series of further
changes in its trading regimes and practices before it will accept
China's membership in the WTO.(21) Chinese leaders see this
resistance as another manifestation of an unwillingness by the US
to accord China the recognition in economic terms which they regard
as already fully merited. Negotiation of China's entry into the WTO
is likely to be a long-drawn out process, with many issues to be
clarified, but its entry would enable both China and the US to
handle their frictions in trade relations in a wider, multi-lateral
context(22)
A further source of contention in economic relations has been
that China does not enjoy access to Most Favoured Nation (MFN)
trading status on a permanent basis, as do the great majority of
the US's economic partners. Although trade tensions continue, there
appears to be a growing consensus that China's MFN status should
not be placed under continuing threat of revocation. President
Clinton announced his support for extension on 20 May 1996 for MFN
for China for the year 1996/97. While there was criticism from a
number of members of Congress in the lead up to the vote in the
House of Representatives, the key decision by the House on 27 June
was taken by a margin of 286 to 141. Members supporting extension
of MFN argued that while they might deplore many Chinese practices
in areas including political repression of dissidents, pirating of
US software and recordings and alleged transfers of arms and
weapons-making materials to countries such as Pakistan (see below),
they did not consider that denial of MFN would be effective in
advancing US interests. The extension of MFN for a further year was
also accompanied by renewed calls for China to be granted MFN
status on a permanent basis like all the US's other major trading
partners, a step which would do a great deal to improve the climate
and character of economic relations.(23)
Arms Control and Proliferation
In the post Cold War environment, proliferation of arms and of
weapons making capacities remain substantial problems and the US
and China have clashed over these issues. Two key issues have
recently been contentious: China's testing of nuclear devices and
its approach towards the negotiations for a Comprehensive Test Ban
Treaty (CTBT), and China's alleged exports of nuclear-weapons
related technology and equipment.
The US has supported strongly the development of a CTBT while
China, along with India, has been one of the major countries
expressing reservations. China's principal area of concern has been
in relation to the issue of on-site inspections of alleged breaches
of the Treaty. China argued that international seismic, atmospheric
and hydro-acoustic monitoring were adequate to ensure that nuclear
capable states do not carry out explosions. China also argued for a
two thirds majority for approval of on-site inspections while a
number of other major powers (including the US) wanted to have a
simple majority for approval. The climate for negotiations on
nuclear non-proliferation efforts was improved by China's
announcement at the end of July 1996 that it would cease nuclear
testing, a step taken after it conducted what it said would be its
last test (on 29 July). Further progress was announced in early
August, when a compromise between the US and China on the issue of
approval for on-site inspections cleared the way for China to
endorse adoption of the Treaty, although the fate of the Treaty
itself still remains in doubt, principally because of the
continuing reservations held by India.(24)
China's exports of weapons and nuclear-related equipment (for
example to Pakistan) has been another area of contention. In early
1996 the US criticised what it saw as the sale by China of ring
magnets to Pakistan which could be used in the enriching of uranium
and the US threatened both sanctions and suspension of prospective
loans from the Export-Import Bank. After four months of
negotiations, an agreement was reached by which China promised to
monitor exports of such technologies and to refrain from future
sales to Pakistan.
A further controversy was publicised in June 1996 with reports
of sales by China of M-11 missiles to Pakistan. The Washington
Post reported deployment of the missiles by Pakistan and also
suggested that Pakistan may now have developed nuclear warheads for
the missiles. Under the Missile Technology Control Regime (MTCR)
concluded in 1987, 28 nations agreed not to export missiles capable
of carrying a payload of more than 500 kilograms more than 300
kilometres. China has not been a signatory to the MTCR but it has
agreed to act in accordance with its provisions. After the reports
appeared, US government officials were reported to be concerned
that the provision of M-11 missiles would constitute a violation of
the MTCR and by law the US government would be required to impose
sanctions on a violator, whether that country is a formal signatory
or not. At the time of writing, this issue was still under
investigation.(25)
Hong Kong
China's resumption of control over Hong Kong has not so far been
a significant issue of contention in US-China relations but it
could easily become one. Under agreements concluded with Britain in
1984 (the Joint Declaration) China will resume full sovereignty
over Hong Kong on 1 July 1997 when the British lease on the New
Territories expires. Under the terms of the Joint Declaration,
China has agreed that Hong Kong will be constituted as a Special
Administrative Region for a period of 50 years: it will retain its
status as a free port and the Region's social and economic system
will remain unchanged; freedom of speech, of association, of travel
and of religion will be guaranteed by law.
China's legal right to assume full control of Hong Kong is
unquestioned internationally. However the manner in which Chinese
authorities assert that control could produce discord. China has
consistently indicated its opposition to the political reforms
promoted by Hong Kong Governor, Chris Patten, in 1992 which
introduced elections for the Legislative Council. China has already
announced its intention to dissolve the current Legislative Council
and replace it with a provisional legislature on 1 July 1997. China
has not been willing to accept any dissent among members of the
Preparatory Committee, which is the body which China has
established to be responsible for matters relating to the
resumption of sovereignty. The Democratic Party, which has a
significant presence on the Legislative Council, has not been given
representation in the provisional legislature.
China will also have difficulties in dealing with groups in Hong
Kong which have protested against the restrictions on dissent in
China and especially the suppression of protest at Tiananmen Square
in 1989. The Chinese government is concerned that such groups
should not be able to spread their ideas within China itself. If
members of these groups, or prominent Hong Kong democrats, such as
Martin Lee, are seen to suffer discrimination after the resumption
of sovereignty then this seems certain to become an issue in
relations with the US. By the provisions of the Hong Kong Relations
Act, the US government is required to monitor China's adherence to
the Joint Declaration with the UK after the resumption of Chinese
sovereignty in 1997. Hong Kong may thus join the series of issues
over which the US and China have substantial disagreements.
Human rights
Human rights have been, and are likely to continue to be, a
substantial focus for discord in the relationship. The end of the
Cold War and the collapse of most of the former Communist regimes
have left China among the few remaining avowedly Communist systems.
While Communist ideology has been de-emphasised in the process of
economic reform, the continuation of the dominant political role of
the Chinese Communist Party remains a paramount goal of China's
leaders. The Chinese government has continued to reject western
attempts to promote universal human rights standards in relations
to China and has indicated a determination to maintain firm control
over dissent. China has argued that 'the issue of human rights can
only be studied in the context of the economic development, history
and cultural traditions of a particular country. The right to
development represents a most basic human right'.(26)
China has not been willing to soften its stance on political
dissent. The prison sentence given to China's most prominent
dissident, Wei Jingsheng, in December 1995 was a clear illustration
of the Chinese government's determination to control dissent. Human
rights issues are a source of ongoing suspicion of China's
government in many sectors of US opinion. The espousal by the US
government of adherence to human rights standards, and its explicit
endorsement of democracy as a political philosophy whose promotion
is a key declared principle of US foreign policy, are a source of
irritation and concern to China's leaders.
China's military exercises in the Taiwan Straits, and the extent
of the US response, produced widespread unease in East Asia. The
Taiwan Straits exercises influenced the discussions held between
the US and Japan in April 1996 in which the security relationship
between the two countries was reaffirmed and was declared to be
relevant to the wider security interests of both countries in the
Asia-Pacific region. The US-Japan talks were, in turn, greeted with
disquiet by China which retains longstanding suspicions about Japan
and opposes strongly any move by Japan to assume a wider role in
regional security.(27) Overall, the developments in early 1996
illustrated the potential for the Taiwan issue to affect the
security climate in the whole East Asian region and to exacerbate
difficulties in US-China relations.
Since March 1996 both the US and China have moved to try to
stabilise their relations. Progress was made during the visit to
China by the US National Security Adviser, Anthony Lake, in early
July. However the relationship remains a difficult one both in the
US, where it may be an issue for debate during the Presidential
election campaign, and in China.
The US Policy Review and the Lake Visit
The disruption to relations with China caused by President Lee's
visit in June 1995 and the Taiwan Straits confrontation in March
1996 prompted a policy review by the Clinton Administration. As the
former head of the National Security Council, Stanley Roth,
commented in mid 1996: 'by the end of last year, the White House
had recognised that it was going to have to manage China policy
very carefully to prevent it from falling off the cliff'.(28) As a
result the Clinton Administration took steps to reaffirm more
precisely the goals of its China policies.
In a major statement on US policy towards China on 18 May 1996,
Secretary of State Warren Christopher noted the widespread
uncertainty which recent developments in China had aroused.
Christopher stressed the great challenges China faces in
maintaining growth and stability. Rapid economic change has been
accompanied by internal pressures for China including inequalities
in growth and development and the advent of mass population
movements from countryside to urban areas by people in search of
jobs and opportunities. China's leaders, he noted, have also had to
face the collapse of Communism as an international force and an
impending leadership transition as the Deng Xiaoping era draws to a
close. In this situation, Secretary Christopher argued, China's
leaders:
are turning to nationalism to rally
their country and legitimate their hold on power. This, in turn,
has prompted fears that an increasingly nationalistic China might
exert its growing power and influence in ways that challenge the
security and prosperity of its Pacific neighbours.
Christopher rejected the view that China should be seen as a
fundamental threat to US interests. He also rejected the view which
he argued is held by some Chinese that 'despite our public
assurances the United States really seeks to contain and weaken
China'. China, he argued, should not be isolated or demonised.
Christopher then set out three tenets for US policy:
[W]e believe that China's development
as a secure, open, and successful nation is profoundly in the
interests of the United States. Second, we support China's full
integration and its active participation in the international
community. Third, while we seek dialogue and engagement to manage
our differences with China, we will not hesitate to take the action
necessary to protect our interests.
In developing areas of common interest, Secretary Christopher
suggested that the time had come for more regular dialogue with
China. He proposed that periodic cabinet level consultations be
held in each other's capitals to facilitate a candid exchange of
views and that regular summits should also be held between the
countries' leaders.
As a step towards the improved dialogue and communication which
Christopher's statement had recommended, National Security Adviser
Anthony Lake visited China between 9 and 11 July. Lake said that
his visit was designed to facilitate an exchange of 'state visits
over the next couple of years'. The visit did not lead to any
discernible major developments in any of the areas of major
contention in the relationship but both sides were able to comment
positively. Defence Minister Chi Haotian said that 'The engagement
policy is being very productive... with the level of engagement
being raised'. For his part, Lake expressed his satisfaction with
the 'very candid and direct exchanges on issues' in his talks and
he indicated that the US was keen to place consideration of
contentious issues in the context of a long-term process of
dialogue. Lake's comments on human rights indicated the distance
the Clinton Administration has come since its attempt in 1993 to
link explicitly human rights and trade. He said that the US was not
softening its approach to human rights issues but, 'We have to
understand that this is a long term issue. In my judgement, its
very unlikely that one meeting, or an effort to devise a trade-off
between one issue and human rights, is going to produce a giant
step forward'.(29)
Continuing Controversy
While the Lake visit has clearly been a positive contribution to
US-China relations, developments since March 1996 have also
illustrated continuing uncertainties and tensions.
In the US, the Clinton Administration's policies towards China
have been criticised by Republican presidential candidate Bob Dole
and may well figure during the campaign itself. Dole devoted a
considerable part of a major address on foreign policy on 9 May to
China and US-China relations. Dole called China's emergence 'the
most important international challenge the US faces as we enter the
21st century' and he supported the maintenance of Most Favoured
Nation status by China, a position he has held consistently since
1980. However, Dole argued that the Clinton Administration 'lacked
a strategic policy towards China. The bottom line is that American
credibility in Asia is low and still declining and American
interests are challenged throughout the region'.
Dole also announced some policies which would not be welcome to
China. He argued that a system of anti-ballistic missiles should be
developed by the US in the East Asia region in cooperation with
Japan, South Korea and Taiwan. The system, which he called the
Pacific Democracy Defence Program, had the appearance of being
aimed primarily at potential threats from Chinese missiles. The
proposal opened up a further area of disagreement with the Clinton
Administration. Dole has argued that America and its allies 'are
under direct threat of missile attack today.' The Clinton
Administration, by contrast, has supported the development of such
systems but at a slower pace and without the emphasis on a
concerted system for East Asia.(30)
The concept of an 'Asian star wars' system has produced divided
reactions. While some observers supported the proposal, it has also
aroused concerns that it will add to suspicions in China that key
figures in the US do see China as a longterm challenge that needs
to be 'contained'. The precise rationale for the system also
remains unclear. Although China does have a program to develop long
range missiles, it has only deployed four such missiles so far and
their capabilities (including accuracy) are regarded as being
limited.(31)
On China's part, signs of continuing reservations about US
policies have been clearly evident. In July attention was raised by
a book widely circulated and publicised in China called The
China that can say no. The book, written by five young
writers, has chapters with titles including 'Don't Be Worried about
saying "be prepared for war"', 'Trade Minister Wu Yi, the Chinese
Iron Lady Who Says No To America', and 'The Shameful Anti-China
Plot Won't Succeed'. One of the co-authors, Zhang Xiaobao, said
that, 'In the past we've said yes too often. The West is engaged in
a plot to contain our progress. Because China has a totally
different ideology, we have been cast in the role of the new evil
empire'. Another co-author, Song Qiang, commented that, 'Its not
that we don't need the US any more, its just that we don't want the
Americans to isolate us and make us dependent on them.'(32) The
experience of China's athletes at the Atlanta Olympics also came in
for highly critical comment in China with allegations that US
spectators were unduly partisan and that the food provided did not
suit Chinese tastes.(33)
In early August, additional controversy also arose over the
issue of Taiwan. The US had allowed a transit visit by Taiwan's
Vice President Lien Chan, who was due to stopover in the US on 12
August on his way to the Dominican Republic. China's Foreign
Ministry said that it had made its opposition to the stopover visit
known to the US and called on the US 'to honour the solemn
commitment it has made on the question of Taiwan so as to prevent
new damages occurring in Sino-US relations'.(34)
Australia's alliance with the US, its extensive relationship
with China and the high priority given by successive Australian
governments to the development of security and economic cooperation
in the Asia-Pacific region make the health of the US-China
relationship of major foreign policy interest. Developments since
1995 have illustrated that tensions in the US-China relationship
are of substantial potential significance for Australia.
Professor Colin Mackerras (Griffith University) has observed
that:
For Australia, China's enormous
population and area, its economic growth, which has now been going
on at a generally consistent and impressive level since the late
1970s, its growing military power and the controversial nature of
much of what it does; as well as the fact that so large a nation is
in the same region, give China a necessarily high priority in
Australia's foreign relations.(35)
Australia's approach towards the PRC developed in the context of
the Cold War and Australia's alliance with the US, concluded in
1951. However Australia's status as an ally of the US has not
prevented it from pursuing independent policies towards China
reflecting Australia's national interests. Along with the US,
Australia did not recognise the People's Republic in 1949 but,
unlike the US, did trade with China through the 1950s and 1960s.
Australia recognised the PRC in December 1972, six years before the
US. Since the late 1970s and the process of economic reform and
rapid growth, Australia's economic relationship with the PRC has
expanded greatly, although Australia's overall share in China's
rapidly growing trade has declined since the early 1980s (see Table
3). In 1995 China was Australia's sixth largest trade partner and
Australian trade with China reached $A6.98 billion, an increase of
12.8 per cent from 1994. In the first four months of 1996 Australia
became China's tenth largest trading partner with Australian
exports having increased by 27 per cent over the equivalent period
in 1995.(36)
After 1972 successive Australian governments enjoyed close
diplomatic and political relations with China but Australia, like
the US, was very concerned at the suppression of dissidents in
Tiananmen Square in June 1989 and for a time suspended some
contacts. Australia continued to pursue human rights issues in its
relations with China but after 1993 the Australian government
expressed its opposition to the Clinton Administration's attempt to
link human rights issues with access to Most Favoured Nation
status. Australia's position on this issue is considered to have
had some influence in the Clinton Administration's decision in May
1994 to change this policy.(37)
Australia welcomed the improvement in US-China relations which
followed the change in policy on MFN but Australian relations with
China have been affected by the rise in tensions between the US and
China since 1995 over Taiwan. Australia has followed a 'one China'
policy since it recognised the PRC in 1972 but has also developed
an extensive economic relationship with Taiwan: in 1995 Taiwan was
Australia's ninth most important trade partner, with exports and
imports valued at $A3.3 billion and $A2.6 billion respectively. The
effect of the tension over the Lee visit to the US was to raise
China's sensitivities over the general issue of interactions with
Taiwan by many countries and so the issue of Australia's
non-official associations with Taiwan became more contentious. As a
result, in October 1995 the Chinese Embassy in Australia protested
about what it saw as a series of visits to Australia by Taiwanese
leaders, including the Governor of Taipei, who was in Australia at
the time. A confidential Department of Foreign Affairs and Trade
report, publicised in January 1996, was reported to state that
'China had threatened to downgrade ties with Australia last year
because Beijing believed Australia was becoming too close to
Taiwan'.(38) The newly-elected Coalition Government thus has come
into office in a climate of heightened sensitivities in relations
with China.
The Howard Government since March 1996 has reaffirmed the
importance of a secure and prosperous Asia Pacific region for
Australia and of the role of bilateral relationships and regional
cooperation between Australia, the US and the countries in the
region.(39) The Foreign Minister, Mr Downer, has emphasised the
significance of China's role in the region and the importance of
engagement with it. Speaking on 20 February, Mr Downer said that,
'In our region, China is emerging as a major power both
economically and strategically. The challenge for the region is to
ensure that we fully engage China in regional affairs and in
playing its proper part in contributing to regional development and
security'.(40)
In comments since 2 March, Mr Downer has supported both the
maintenance of a secure regional environment and endorsed the role
the US as central to its achievement. During the tension between
China and Taiwan in March, Mr Downer urged both sides to avoid
misunderstanding or miscalculation. He said that 'we have called
for restraint on the part of the Chinese. We will be making similar
points to Taiwan'. In relation to the US role at the time, the
Minister said 'I think what we have seen in the last few days is a
very clear demonstration by the United States that it is interested
in maintaining its involvement in the security of the region and we
obviously welcome that.'(41) The government also called on China to
support attempts to secure a Comprehensive Test Ban Treaty and
criticised the nuclear tests conducted by China in early June and
late July.(42)
The new Australian Government has continued to emphasise the
value of Australia's growing economic relationship with China.
However its decision to cancel the 'soft loans' provided under the
Development Import Financing Facility (DIFF) scheme has proved an
irritant. China has been the second largest beneficiary under the
scheme and has received about 30 per cent of funds allocated since
1984/85; in 1996 there were reported to be 19 DIFF-supported
projects in China to a total value of $140 million. In May, China's
Ambassador to Australia, Hua Junduo, criticised the decision to
cancel the scheme and said that 'We hope that the Australian
government will follow internationally accepted practices and
continue to support the projects in the pipeline and implement
these projects on time'.(43)
In a speech in Hong Kong on 4 July 1996, Mr Downer reaffirmed
that 'Strategically, China, and our longterm relationship with it,
is of vital importance in Australian foreign policy'.(44) However,
recent developments have underscored the current political
sensitivity of this relationship in the wider context of US-China
relations. One reflection of this has been that issues which have
been able to be handled with limited levels of contention or
difficulty in the recent past, are now causing more difficulty.
With China now highly sensitive about Taiwan in the wake of
developments since mid 1995, the issue of non-official visits to
Taiwan by Australian political figures is proving to be more
potentially contentious. China has expressed concern about the
planned visit in early September to Taiwan of Minister for Primary
Industry, John Anderson, although ministers in the former Labor
government made similar such non-official visits. The impending
visit to Australia by the Dalai Lama is also a focus for
disagreement: the Dalai Lama last visited Australia in 1992 and he
met privately with then Prime Minister Keating but China has
expressed its displeasure at the prospect of a meeting with Prime
Minister Howard.(45)
Alliance relations between Australia and the US have also
attracted some critical comment from the Chinese media. The annual
'Ausmin' talks between Australia and the US saw a strong
reaffirmation of the alliance relationship and an enhanced program
of military exercises was announced. The communique from the talks
noted the 'fluid' and 'unpredictable' security environment and also
endorsed pursuit of comprehensive and open engagement with China.
The communique stated:
Both sides noted the profound impact
of the U.S.-China relationship on the future security and
prosperity of the Asia Pacific region. Both sides underlined the
importance of pursuing a policy of comprehensive engagement with
China and of supporting China's development as a secure, open and
successful nation and as a strong and constructive member of the
international community. Both sides agreed that a 'one China'
policy best served the region's interest in stability and
prosperity.(46)
However, an article in the official People's Daily
reacted critically to recent trends in US and Australian policies.
The editorial accused the US of using its military ties with Japan
and Australia in a bid to 'entrap' China. Referring to a recent
comment by Defense Secretary William Perry that Japan and Australia
were the northern and southern 'anchors' of the US security
engagement in Asia, the article said, 'From this we can see that
the United States is really thinking about using these two
"anchors" as the claws of a crab'.(47)
Foreign Minister Downer immediately rejected the interpretation
carried by the article. He said on 7 August that he had recently
raised with Foreign Minister Qian Qichen, the fact that Australia
was pursuing a new security declaration with the US (when the two
ministers were attending the annual ASEAN meetings in July):
He didn't object at all to that when
I mentioned that to him before the AUSMIN talks took place. But I
did go out of my way to make sure that I briefed the Chinese in
advance. I have said to Qian Qichen privately, and I have often
said publicly, that the Australian government does not support a
policy of containment of China. We support a policy of engagement
with China... We think it is fundamentally important to the future
security of the region that China is fully engaged in the
architecture of the region..(48)
At the time of writing (mid August), the Australian government
was preparing to hold further talks with China during the visits by
Foreign Minister Downer from 22 August and the Minister for Trade,
Mr Fischer, from 27 August. Mr Downer was reported to have
reaffirmed Australia's high priority on relations with China which
ha said are 'broad based, positive and mutually of benefit'.(49) On
15 August, the Minister for Immigration, Mr Ruddock, after
discussions in Beijing with the director general of the foreign
affairs committee of the State Council, Liu Huaqiu, said that Mr
Liu had nominated four issues which China wished to discuss with
Australia: the forthcoming visit of the Dalai Lama, Mr Anderson's
impending visit to Taiwan, the cancellation of loans under the DIFF
scheme, and Australia's recent alliance discussions with the
US.(50) The outcome of these forthcoming discussions in Beijing
will provide further indications of how Australia's interests may
be affected by the recent trends in China's wider foreign
relations, especially with the US.
As this paper has suggested, many of the problems being
experienced in relations between China and the United States stem
from the fact that China is an emerging major power in the early
phases of the post Cold War era. China is undergoing a remarkable
period of economic growth which is simultaneously improving living
conditions for most Chinese while placing the country's economic
and political institutions under stress. The ruling Communist
Party's legitimacy has been bolstered by the record of growth since
1978 but its capacity to control China has been made more difficult
by the declining salience of Communism as an ideology and by the
development of a more complex and decentralised society. While
continuing economic growth is drawing China into a wide range of
closer associations with its major trading partners, this is
occurring at a time when the leadership is especially sensitive
about issues of territorial sovereignty. China's foreign policy is
thus reflecting a country undergoing rapid change, while its
leadership is strained by the demands of maintaining an effective
administration, amid contests for influence in the struggle for
political succession.
In this context, it is not surprising that the US-China
relationship has experienced difficulties. As Winston Lord
(Assistant Secretary of State for East Asia and Pacific Affairs)
has recently observed:
We are dealing with a complex,
difficult and prickly partner whose power is growing, whose
leadership is in transition and whose government is turning
increasingly to a nationalism that is conditioned by thousands of
years of experience as the Middle Kingdom, followed by more than a
century of humiliation by foreigners.(51)
The US has also had its own problems in policy making. In the
post Cold War environment, the US has a wide range of economic,
political and security interests to pursue with China. However,
without the discipline formerly imposed by the strategic contest
with the Soviet Union, it has proven difficult to establish clear
and consistent priorities for those interests and US policies have
appeared both to China and to Western observers to be
ill-coordinated and sometimes contradictory. The appearance of
inconsistency has helped fuel suspicions among Chinese officials
that while the US professes to seek 'engagement' with China, it
actually seeks rather to contain the rise of a potential rival
superpower.
Given these factors, pursuit of the US-China relationship is
likely to continue to involve both strain and some conflict. As
this paper has argued, the US and China have substantial areas of
disagreement in human rights, arms control, economic relations and
especially over Taiwan. Hong Kong may join these issues as a focus
for dispute in the near future. Some disputation and conflict may
be hard to avoid over these issues. However, the US could improve
the prospects for handling its relations with China by adding
additional substance and depth to its own declared policy of
engagement. The policy could be enhanced by more regular dialogues
of the kind suggested by Secretary Christopher in May. The basis
for engagement could also be bolstered by moving to extend
permanent MFN status to China. These steps would help remove the
image of China being a 'special case' in US foreign policy and help
alleviate concerns in China that the US harbours a desire to
'contain' or limit China's rise in national strength and
international significance.
The future of US-China relations cannot be predicted with
confidence. Both sides have recently taken steps to improve
management of their relations, especially through the Lake visit in
July, but no immediate breakthroughs appear likely. The US, in
particular, seems unlikely to move to renew its dialogue with China
at head of state level until after the Presidential elections. In
the medium term, the future of the relationship will depend both on
development of an enhanced process of dialogue and on the process
of economic and social change and political succession in China.
Improved dialogue could clearly help increase communication and
confidence in the relationship. However, until the outcome of that
process of transition in China is clarified, Chinese foreign policy
and its key bilateral relationship with the US, are likely to
continue to be a factor for uncertainty in the Asia-Pacific
region.
- Chalmers Johnson, Nationalism and the market: China as a
Superpower, Japan Policy Research Institute, Working Paper No
22, July 1996, p 2. Alternative methods of measuring China's GDP,
using estimates of 'real purchasing power' or 'purchasing power
parity' suggest that its per capita GDP should be higher than
official estimates: the Asia Pacific Economic Group, for example,
calculates China's per capita GDP in 1995 at $US1678 (see Table
1).
- 'China's politics of crime', The Economist, 10 August
1996.
- Michael Yahuda, The International Politics of the Asia
Pacific , London, Routledge, 1996, p 218-219.
- 'China's Communists: Great leap backwards', International
Herald Tribune, 3 July 1996.
- Nayan Chanda and Karl Huus, 'The New Nationalism', Far
Eastern Economic Review, 9 November 1995.
- Strategic Survey 1995/96, International Institute of
Strategic and International Studies, 1996, p 175. A survey of
China's military capabilities and the implications of its program
of military modernisation is provided by Gary Brown, China as a
Military Power: Peril or Paper Tiger?, Research Paper No 1,
Parliamentary Research Service, 15 August 1996.
- 'China's push for sea control angers ASEAN', The
Australian, 23 July 1996.
- Yahuda, op cit, p 219.
- Michael Dobbs, 'US focuses on better ties to China: Policy
flip-flops roil mercurial relationship', The Washington
Post, 9 July 1996.
- Yahuda, op cit, p 142.
- Michael Dobbs, 'US focuses on better ties to China: Policy
flip-flops roil mercurial relationship', The Washington
Post, 9 July 1996.
- 'Most Favoured Nation' status essentially confers normal
trading rights to countries trading with the US. Under the
Jackson-Vanik ammendment to the Trade Act of 1974, MFN status can
be extended to non-market economies only if the President grants a
waiver certifying that the country does not impede emigration. This
measure was adopted to encourage the Soviet Unon to permit the
emigration of Soviet Jews. China first gained MFN status under the
Jackson-Vanik ammendment in 1980 and its annual renewal was
regarded as routine until the Tainanmen massacre in 1989: see
Marcus Noland, US-China Economic Relations, Working Papers
Series on Asia Pacific Economic Cooperation, Washington, Institute
for International Economics, June 1996, p 11.
- Jonathan D. Pollack, 'The United States in Asia in 1995: The
case of the missing President', Asian Survey, XXXVI, 1,
January 1996, p 6.
- David Shambaugh, 'The United States and China: a new Cold
War?', Current History, September 1995, p 244.
- Yahuda, op cit, p 138.
- Shambaugh, loc cit .
- Economist Intelligence Unit, Country Report: China, Mongolia,
2nd quarter 1996, p 14.
- 'Damned Lies and statistics', Far Eastern
Economic Review, 30 May 1996.
- David Lague, 'In Search of Harmony and a Stable Asia',
Sydney Morning Herald, 18 November 1995.
- 'US withdraws its threat of sanctions against China; trade war
averted; officials cite Beijing crackdown on pirated goods',
Washington Post, 18 June 1996.
- Noland, op cit, p 25-27.
- See Lu Weiguo, Reform of China's Foreign Trade
Policies, Research Paper No 19, Parliamentary Research
Service, 30 November 1996.
- 'House supports China MFN renewal; to hold further hearings on
China', BNA International Trade Daily, 1 July 1996.
- David Anderson, Touch and go for a comprehensive test ban:
the 28 June deadline, Current Issues Brief, No 19 1995-96,
Parliamentary Research Service, 25 June 1996; 'Safeguard vow on
nuclear arms', Sydney Morning Herald, 2 August 1996;
'Chairman of talks proposes four word "refnement" to CTBT text',
USIS Washington File, 9 August 1996..
- 'Going Ballistic', Far Eastern Economic Review, 27
June 1996.
- Xinhua newsagency, 18 July and 25 December 1993, quoted in
Sheldon Simon, 'East Asian Security: the Playing Field has
Changed', Asian Survey, XXXIV, 12, December 1994, p
1052.
- 'Cracks in the armour', Far Eastern Economic Review, 2
May 1996.
- Michael Dobbs, 'US focuses on better ties to China: Policy
flip-flops roil mercurial relationship', The Washington
Post, 9 July 1996.
- The Washington Post, 11 July 1996.
- 'On the offensive', Far Eastern Economic Review, 23
May 1996.
- See Brown, China as a Military Power, p 22.
- 'Chinese warned of showdown with US', Sydney Morning
Herald, 13 July 1996.
- Steven Mufson, 'China puts forward consistent, caustic anti-US
themes: Diversity of complaints hints at resevoir of grievances',
The Washington Post, 13 August 1996.
- 'China says Taiwan VP's trip may hurt US ties',
Reuters, 7 August 1996.
- Colin Mackerras, 'China' in Russsell Trood and Deborah
McNamara, eds, The Asia-Australia Survey 1996-97,
Melbourne, MacMillan, 1996 (forthcomng), p 57.
- 'Australia rises to 10th on China's trade list', The
Age, 24 June 1996.
- Mackerras, loc cit, p 57.
- ibid, p 59.
- 'Security through Cooperation', Address by the Minister for
Foreign Affairs, Mr Alexander Downer, to the Conference on "The New
Security Agenda in the Asia Pacific Region", co-sponsored by
International Institute for Strategic and International Studies and
the Strategic and Defence Studies Centre of the Australian National
University, Canberra, 2 May 1996.
- 'Engage emerging giant, China, Downer argues', Canberra
Times, 21 February 1996.
- 'Downer warns China over war games', The Australian,
13 March 1996.
- 'Australia calls on China to end nuclear test program', The
Australian, 9 June 1996.
- Ravi Tomar, A DIFFerence of Opinion: Cancellation of the
Development Import Finance Facility, Current Isues Brief No
20, 1995/96, Parliamentary Research Service, 25 June 1996, p 8,
13.
- 'Australia, North East Asia and China: Opportunities in a
changn world', Address by the Hon Alexander Downer MP, Minister for
Foreign Affairs of Australia, at a joint Asia House/Austcham
luncheon, Hong Kong, 4 July 1996.
- 'China demands PM snub Dalai Lama', Sydney Morning
Herald, 13 August 1996.
- Australia-United States Ministerial Consultations: Joint
Communique, p 2.
- 'Australia and Japan are the claws US will use to entrap us,
says China', Australian Financial Review, 8 August
1996.
- ibid.
- 'Downer courts Chinese', The Australian, 16 August
1996.
- 'Beijing concerned by the mood in Canberra', Canberra
Times, 15 August 1996.
- 'US-Sino spats could turn into something nasty', Australian
Financial Review, 21 June 1996.