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### Viewing cable 08BEIJING661, Prospects for U.S.-China Relations

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
08BEIJING661 | 2008-02-24 23:11 | 2010-12-04 21:09 | SECRET | Embassy Beijing

`

    VZCZCXRO5842
    OO RUEHCN RUEHGH RUEHVC
    DE RUEHBJ #0661/01 0552300
    ZNY SSSSS ZZH
    O 242300Z FEB 08
    FM AMEMBASSY BEIJING
    TO RUEHC/SECSTATE WASHDC IMMEDIATE 5296
    INFO RUEHOO/CHINA POSTS COLLECTIVE
    RUEKJCS/SECDEF WASHDC
    RHEHNSC/NSC WASHDC
    RUEAIIA/CIA WASHDC
    RHMFISS/CDR USPACOM HONOLULU HI

` `

    S E C R E T SECTION 01 OF 04 BEIJING 000661

    SIPDIS

    SIPDIS

    E.O. 12598: DECL: 02/23/2028
    TAGS: PREL CH
    SUBJECT: Prospects for U.S.-China Relations

    Classified by Ambassador Clark T. Randt, Jr. Reasons 1.4 (b) and (d).

    SUMMARY
    -------

    ¶1. (S) The United States and China share important and growing
    political and economic interests that will bind us indefinitely,
    despite frictions. Where interests vary or compete, we share a
    common interest in managing our differences. In the medium term,
    China's core foreign policy goals -- securing access to energy
    supplies and maintaining a stable international environment in order
    to pursue domestic economic development -- will keep China as a
    status quo power. Over time, China's growing strength will lead to a
    foreign policy more willing to confront the United States but also
    better able to take up the responsibilities of a global stakeholder.
    China will continue to demand more from the United States on Taiwan
    than we are willing to give, and Taiwan will remain a potential
    flashpoint. As we face an increasingly self-confident and powerful
    China, we can and should continue to use bilateral policy
    instruments, including high-level engagement (such as the Senior
    Dialogue and Strategic Economic Dialogue), China's multilateral
    commitments, and the Chinese desire to build its international image
    and standing to protect U.S. interests, spur positive change in China
    and increase Beijing's stake in international institutions and its
    adherence to international norms. End Summary.

    ECONOMIC TIES THAT BIND
    -----------------------

    ¶2. (C) The United States and China share enormous economic interests.
    China is the top U.S. trade partner outside of North America, and
    public and private sector analysts agree that China's share of our
    trade will continue to rise. Exports have been a primary driver of
    China's growth. Export-oriented employment, along with technology
    transfers and other indirect benefits of foreign investment and
    trade, are major ingredients of China's economic miracle. Similarly,
    low inflation and strong growth in the United States over the last
    two decades stem in part from low-cost Chinese imports and financial
    inflows. It is in the interests of both the United States and China
    to maintain the benefits created by our complementary economies while
    correcting current imbalances by continuing to pressure China to open
    markets, particularly in the service sector, and to significantly
    improve the protection of intellectual property rights. At the same
    time, frictions need to be managed carefully to avoid harming our
    common economic interests.

    POLITICAL COOPERATION
    ---------------------

    ¶3. (C) Shared overall U.S.-China interests in peace, security and
    prosperity likewise are dogged by frictions. Differences over
    values, political systems, specific goals and means will continue.
    The list of areas of political and security friction is long and
    includes China's authoritarian political system, China's support for
    unsavory regimes, China's breakneck military modernization, China's
    paranoid fear that the United States secretly promotes regime change
    and "separatists" in Taiwan, Tibet and Xinjiang, growing nationalism
    and the sense in some quarters in both Washington and Beijing that
    the United States and China are commencing a long-term struggle for
    global political, economic and military supremacy. Countering these
    differences is the buildup of mutual trust between the U.S. and
    Chinese leadership and the willingness to work together in an
    increasingly broad spectrum of common strategic interests. China's
    realization of its own interest in a stable, non-nuclear Korean
    Peninsula and frustration with an inept North Korean leadership
    seemingly incapable of creating an economy that can sustainably
    support its own people, leading to constant refugee outflows, has led
    to close cooperation with the United States in the Six-Party Talks.
    The evolution in China's position on Darfur, driven by the
    Olympics-related international publicity concerning China's role in
    abetting genocide, shows that extreme diplomatic and public pressure
    can redirect Chinese policy to a degree. China's cooperation on
    Burma and Iran has been grudging and limited, but real. We have been
    able to leverage China's growing interdependence and concern for its
    global public image into support for multilateral actions that
    further U.S. goals.

    FAMILIARITY BREEDS FRICTION
    ---------------------------

    ¶4. (C) The expanding breadth, scale and intensity of U.S.-China
    engagement bring additional opportunities for friction as well as
    cooperation. China's gradual approach to exchange rate flexibility,
    slowness on further trade liberalization, weak IPR protection and
    other barriers to trade and investment require constant attention.
    China's perception that U.S. assertiveness on WTO commitments, import
    regulation, investment cases and product safety is discriminatory
    requires education and explanation. Such frictions could become more
    acute should the economy worsen, protectionism rise, or sensitivity

    BEIJING 00000661 002 OF 004

    over foreign investment sharpen in either country. Politically,
    differing assessments on the urgency of issues like Iran's nuclear
    program and appropriate tactics to realize shared strategic goals
    will mean China and the United States continue to butt heads
    diplomatically. Divergent views on democracy and human rights will
    continue to be a sore point in the bilateral relationship. Managing
    day-to-day frictions with an eye to larger interests will be the
    greatest challenge for policy-makers.

    RHETORIC: STRATEGIC REBALANCING
    -------------------------------

    ¶5. (C) China's rise and emergence as a global power is a powerful and
    popular theme in Chinese contemporary culture, with hundreds of
    books, major TV series, countless media articles and academic studies
    devoted to it. Official public statements on foreign policy stress
    "democratization of international relations" and a more "multi-polar"
    world, contrasted with U.S. "unilateralism." Many scholars,
    officials and ordinary citizens believe China's past weakness has
    forced it to endure "injustices" from the United States, like the
    Taiwan Relations Act and U.S. arms sales to Taiwan, and Chinese have
    no trouble linking these injustices to a centuries-long string of
    humiliations China perceives itself as having suffered at the hands
    of foreign powers. MFA officials often complain informally (and
    unfairly) that the United States demands China address U.S. concerns
    while ignoring China's concerns. As China's international presence
    and nationalist sentiment grow, commensurate with greater political,
    economic and military might, Chinese analysts anticipate a more
    assertive Chinese foreign policy and a greater readiness to confront
    the United States.

    REALITY: STATUS QUO POWER
    -------------------------

    ¶6. (C) Despite the flag-waving "rising China" theme in popular
    culture and official media promising a more assertive Chinese
    international stance, the reality of China's foreign policy for at
    least the next five years is that China is committed to the
    international status quo as it reaps the benefits of U.S.-policed
    globalization. President Hu's "Harmonious World" foreign policy,
    officially sanctified at the 17th Party Congress in October,
    explicitly endorses the existing world order and declares that
    China's interest is in maintaining a stable international environment
    where it can pursue domestic economic and social development goals.
    China's foreign policy leaders take great pains to highlight China's
    "developing country" status as a way to offset international calls
    for China to play a more significant international role, and to
    expend more material and political resources, commensurate with its
    "emerging power" status. In January, Executive Vice Foreign Minister
    Dai Bingguo held the fifth session of the U.S.-China Senior Dialogue
    in his poor rural home province of Guizhou rather than Beijing to
    make the point that China remains poor and is confronted with
    economic development challenges on a large scale. Continued access
    to energy supplies and raw materials on the international market is
    essential to China's continued economic growth, which means continued
    reliance on global peace and stability and the existing global
    security system to protect such shipments. As XXXXXXXXXXXX
     told XXXXXXXXXXXX, "when it comes to the basic Chines
     interest in securing  energy supplies and raw materials for our
    economic growth,  free-riderism works for us right now."

    IRRESPONSIBLE STAKEHOLDER?
    -------------------------

    ¶7. (C) Internal debate continues in China regarding its appropriate
    international role. Some foreign policy figures argue China should
    seize opportunities to lead on global issues like climate change,
    nonproliferation and mediation of international disputes. Contacts
    have said these remarks reflect internal government debates on
    balancing global with purely national interests. The feeling in
    China that China remains too poor and underdeveloped to be much of a
    global stakeholder remains strong, although it would appear that
    China's standard of "developed" is increasingly the United States.
    One academic said, "the United States still reaps almost all of the
    benefits of 'international public goods' and should expect to bear
    almost all of the costs." This argument, along with the frequent
    pious invocation of "non-interference in internal affairs" provides a
    thin political justification for China's fundamentally mercantile
    pursuit of resources in Burma, Iran, Sudan and other pariah states.
    The tension between China's long-term, broad global interests and its
    short-term, naked national interests will persist in Chinese foreign
    policy for some time. So far, public opinion has been the most
    effective tool in blunting the Chinese effort to profit from its
    rogue-state relationships. The Chinese want to build an
    international image as a responsible power and are sensitive to
    accusations that they facilitate the abuses of rogue regimes. The
    Chinese cooperation on Darfur after international outcry began to

    BEIJING 00000661 003 OF 004

    threaten another core interest (a successful Olympics) demonstrates
    how public opinion can provide effective motivation.

    ACTIVISM VS. NON-INTERFERENCE
    -----------------------------

    ¶8. (C) Part of the debate over China's role as stakeholder stems from
    differing views on China's long-standing, expedient policy of
    "non-interference." Since the beginning of the reform era, China has
    generally followed Deng Xiaoping's advice to maintain a low profile
    and focus on its own development. In this spirit, China's pledge of
    "non-interference" in other nations' affairs became a pillar of
    China's declared foreign policy. More recently, some have viewed
    President Hu Jintao's trademark "Harmonious World" policy as a subtle
    renunciation of non-interference that acknowledges the need for China
    to be engaged in a globalized world. One prominent foreign policy
    expert told us that while China is still "feeling its way" on an
    activist foreign policy, Beijing will continue to move toward greater
    engagement and less "non-interference." XXXXXXXXXXXX said
    more bluntly that China's non-interference policy "has  always been
    flexible" and that China is comfortable in an activist  role whe
     it wants to be.

    HUMAN RIGHTS
    ------------

    ¶9. (C) As economic success increases China's confidence that China
    can develop without Western-style democracy, resistance to U.S.
    promotion of human rights may intensify. At the same time, Chinese
    leaders see the utility of a limited expansion of civil society,
    including improvements in the rule of law and a stronger role for
    approved religions, NGOs, charities and other actors in areas that
    contribute to social stability and do not challenge Communist Party
    rule. China is open to U.S. experience in these areas, though
    Chinese leaders will tolerate only slow and limited change. In areas
    such as Tibet and Xinjiang, the fear of separatism leads to tighter
    restrictions on the growth of civil society. We should continue to
    press the Chinese to resume our formal human rights dialogue to
    provide a bilateral channel for a regular, high-level exchange of
    views. In such discussions, we should continue to express our
    serious concerns over Beijing's human rights record and appeal to
    China's growing awareness that greater respect for human rights,
    religious freedom and the rule of law will serve to promote the very
    development and social stability that China seeks as well as to
    improve China's international image.

    THE ROLE OF SOFT POWER
    ----------------------

    ¶10. (C) China actively pursues educational exchanges, cultural
    performances, youth exchanges and other instruments of "soft power."
    Development assistance to resource-rich nations has also grown and
    remains generally without conditions (except with respect to the
    Taiwan issue). China is also making attempts to break into what it
    sees as an undesirable Western, and specifically American, monopoly
    of the international news media and to offer an alternative to
    ubiquitous American popular culture. Soft power is a useful arrow in
    the Chinese foreign policy quiver but should not be overestimated.
    Chinese culture tends toward exceptionalism rather than universality;
    i.e., many things about Chinese culture, in the Chinese view, are
    appropriate (or even intelligible) to Chinese alone. Moreover, China
    senses that its traditional low profile and attempts not to be seen
    as competing with the values and political systems of other countries
    are part of its attractiveness. The Chinese acknowledge both the
    limits of soft power and that China's reliance on soft power is in
    large measure due to the fact that China, in the near-term, lacks
    hard power.

    TAIWAN
    ------

    ¶11. (S) China has long identified Taiwan as one of its core
    interests. Chinese leaders see preventing Taiwan's formal
    independence as crucial to their legitimacy, and the United States is
    committed to the defense of the status quo absent agreement to a
    change by the peoples on both sides of the Strait. Taiwan will
    continue to be the largest threat to U.S.-China relations,
    potentially resulting in armed conflict. Though China always wants
    more, for the past two years Chinese leaders have appeared relatively
    satisfied with and even appreciative of U.S. policy toward Taiwan,
    despite rhetoric to the contrary. U.S. disaffection with Chen
    Shui-bian and explicit U.S. opposition to the DPP referendum on UN
    membership in the name of Taiwan have eased China's anxieties to a
    degree. Nevertheless, our uneasy modus vivendi on the Taiwan issue
    is fragile. Beijing may mistakenly come to believe, despite our
    constant disclaimers, that we are willing to "manage" Taiwan in
    partnership with China over the heads of Taiwan's democratically
    elected leaders. Taiwan's next President may win a few short-term,
    small concessions from China. However, thwarted Chinese expectations

    BEIJING 00000661 004 OF 004

    of progress toward reunification or of a U.S. willingness to "manage"
    Taiwan could lead to a rocky medium term.

    CHINA'S EXPANDING "CORE INTERESTS"
    ----------------------------------

    ¶12. (S) In addition to Taiwan and other sovereignty concerns (e.g.,
    Tibet and the Dalai Lama and Xinjiang and Rebiya Kadeer), China has
    begun to articulate additional "core interests" in Chinese foreign
    policy. So far, these core interests center on China's access to
    energy resources. Thus, in Iran and Sudan China has resisted
    international sanctions that would affect its energy cooperation.
    Recently, China has suggested that cooperation in the UNSC and in
    other areas is contingent on the U.S. not sanctioning Sinopec's
    investment in Iran's Yadavaran oilfield. U.S. policy will need to
    ensure that when we challenge China's self-defined core interests, we
    do so deliberately and advisedly.

    ROLE OF U.S. POLICY
    -------------------

    ¶13. (C) Many aspects of the U.S.-China relationship are not amenable
    to foreign policy intervention. China's growth and slow settling
    into the role of a great power result from largely economic and
    historical trends. Similarly, tensions over Taiwan, given the firm
    parameters of U.S. law and our interests in ensuring a peaceful
    resolution of issues affecting a democratic Taiwan, will be
    uavoidable. Nonetheless, we can protect our economic and political
    interests, spur positive change in China and increase Beijing's
    realization of its stake in effective international institutions and
    international norms. China's changing worldview and increasing
    interest in how it is perceived on the international stage will
    create new opportunities to influence China. Pursuing an
    increasingly close and cooperative U.S.-China relationship will
    require constant attention and frequent high-level meetings and
    dialogues to expand our common interests, manage our differences and
    prevent misunderstandings and misperceptions in a rapidly changing
    world.
    RANDT

`