Wednesday, 31 October 2012

CHINA’S CONTINUING STRATEGIC INTERESTS - The World as seen from the Politburo and How the West Should Respond

The preservation of peace in the Asian hemisphere for the first half of the 21st Century will be a difficult challenge for us all.
The preservation of a principled peace (that is one based on the current international rules-based order) will be an even more difficult challenge.
Peace at any price can also readily be purchased.
But, if it is to be a peace based on the values which are central to our national and international purposes then there is a higher price to pay.
These are the values entrenched in the UN Charter two-thirds of a century ago.
That is why avoiding war between China and the United States, and building a durable peace founded on a regional rules-based order, must be the central task of Australian foreign and security policy for the decade ahead.
Of course, the question which arises then is about what constitutes the most appropriate foreign and security policy mix to bring about these objectives.
And it’s often at this point that the debate degenerates from mix to mush.

Improving Our Analysis of Contemporary China
Disciplined thinking is necessary to deal with these hard questions.
By which I mean disciplined and integrated thinking across the strategic, economic and foreign policy terrain. There is still a tendency in our respective foreign and security policy establishments to look at these issues in self-contained analytical silos.
For example, China’s domestic politics is x.
China’s domestic economy is y.
Chinese demography and sociology is z.
And then, again, China’s defence and broader Security policy is x.
China’s global economic power is y.
And China’s military capabilities are z.
Of course the same siloed approach often characterises Chinese analyses of the United States and its allies.
Analysis, therefore, for policy makers is often of a fragmented nature, presenting conflicting realities for policy decision makers.
The truth is the nation state is all these things combined, and it is inevitable that there will be both conflicting and complimentary forces at work within any national body politic. We should also regard it as normal that policy positions are never static but dynamic.
We should never assume absolute consistency over time or between different players in the one system.
This is not the logic just of democracy. It’s the logic of all nation states where competing interests and priorities are in play.
My overall point is this: we need to be both good at our analysis and our synthesis of China’s aggregate assets and liabilities.
We need to know what policy positions are unchangeable (e.g. on the Independence of Taiwan) as opposed which may be changeable (e.g. the possibility of the floating of the Yuan).
Just as we must also come to terms with what interests and values drive Chinese international policy behaviour.
In other words, we need a rolling, aggregate, textured understanding of Chinese contemporary capabilities and intentions.
And whereas these terms are often only intended for use in the military domain, my meaning here is much broader; what are China’s national capabilities and intentions and how can they best be influenced for the benefit of us all?
Of course this could be said of any nation state of the current international order.
But what is unique about China in the current order is that within the decade ahead, we are likely to see China emerge as the largest single economy in the world by whichever measure. Chinese military capabilities are also growing.
China’s foreign policy has, for the last decade and a half, become more assertive. 
Therefore, getting not only our analysis, but also our synthesis right on the current shape of People’s China is no longer just of boutique interest to the intelligence community.
It is of profound relevance to all the dimensions of our modern state craft – both within this region and beyond.
As I have said repeatedly, as China becomes the world’s largest economy, this will be the first time since George III that this position has been occupied by a non-English speaking, non-Western, non-democratic state.
We are, therefore, in the midst of a profound geo-economic, geo-political and prospectively geo-strategic transition.
And underpinning all of the above, there are profound civilizational dimensions as well.
These are not simply questions of cultural form, given that historically there have been significant difference between German, Spanish, British and American attitudes to their national politics and their place in the world.
Just as there are profound cultural differences between Indian, Indonesian, Singaporean, Japanese and Chinese views of their respective national and international politics.
The question here is not one of East versus West.
The question rather is one of democracies, and non-democracies and the applicability of those universal values already entrenched in the relevant international codes, such as the Universal Declaration on Human Rights and the International Code on Civil and Political Rights.
We believe, for example, that these international codes rest on underlying principles of political freedom, economic freedom and social justice.
Given that China’s continuing political orthodoxy is that it remains a dictatorship of the proletariat under the leadership of the Chinese Communist Party, the truth is not all these values are shared in Beijing.
We need to be clear-minded about this.
Just as we also need to be open-minded about the fact that China’s domestic political processes are in a state of evolution.
China, through the Cultural Revolution, was a totalitarian state. In the period post-1978 through to Tiananmen in 1989 and beyond, it could perhaps be described as an authoritarian state.
Today there is significantly more political and press freedom in China to express different positions on important policy debates, although core debates which go to the continued central political role of the Chinese Communist Party remain off limits.
There is a much more radical experiment underway in China in various forms of economic freedom.
I am optimistic that these freedoms will continue to grow in the future post the upcoming leadership transition.
We would be churlish not to recognise that the Chinese economy is infinitely more open than it was, and that Chinese global growth in recent decades has become critical to global economic growth.
Nonetheless there are real differences in the value systems and these cannot be detached from our synthesis of what we mean today by “contemporary China” across the full complexity of Chinese values, interests and capabilities.
The time has come for we in the West to radically improve our analytical game on understanding this complexity because failure to do so will inevitably produce flawed policy responses and therefore our ability to shape a common rules-based future with our Chinese friends.
That is where this book I am launching tonight “Competitive Strategies for the 21st Century – Theory, History and Practice” represents an important contribution to the policy debate.
This volume represents a hard edged, tough minded strategic “realist” view of China’s current military posture and how the United States and its allies could engage China within the framework of what the authors describe as “strategic competition”.
The authors describe this paradigm as lying at the approximate mid-point of the international relations spectrum with cooperation lying at one end and conflict at the other.
For those of us more accustomed to the gentler shades of diplomacy, this provides a stark analysis and a set of stark options.
In international relations theory, I would probably best describe my own approach as that of a “neo-realist” – one who does not deny, and in fact, fully accepts underpinning strategic realities, while at the same time believing that this is not incompatible with building a liberal-institutionalist rules-based order which minimises the possibilities of conflict, maximises the areas of strategic cooperation, and therefore over time helps to transform strategic policy mindsets which may otherwise accept conflict as the ultimate destination point.
In other words, it’s possible to deal with fundamental strategic realities while also building the institutions of cooperation.
For these reasons, there will be parts of this book with which I will have significant disagreement.
At the same time, such sharp-edged books represent a necessary antidote, or at least counterbalance against more misty-eyed views that peace and universal brotherhood are the universal destinations of all human kind.
History cautions us against any such conclusion.
Just as history cautions us against strategic mindsets that assume the inevitability of competition leading to conflict.
I believe that this is very much the case in 1914 (although not in 1939).
I am still haunted by chapter one of Keegan’s magisterial history of the First World War and his devastating analysis of the dynamics of mobilisation and counter mobilisation once Sarajevo has occurred.
Chinese Interests
You’ll be pleased to know that today I don’t intend to provide an attempted comprehensive overview of Chinese interests, capabilities and intentions.
I would however like us to reflect on the likely contours of China’s continuing strategic interests which will govern policy decision making by the Standing Committee of the Politburo which will be elected by the Party Central Committee once the 18th Party Congress begins in Beijing on the 8th of November.
And here I draw upon remarks I made last week in a lecture delivered to the Oxford University China Centre on China-US Relations (2012-2017) and address to the International Institute for Strategic Studies.
First, the new leadership will seek to sustain the political pre-eminence of the Chinese Communist Party within the country.
This is no mean feat given the party’s endemic problems with institutional corruption which its own leadership continues loudly to criticise.

The Chinese Community Party is still a Leninist party - but no longer a Marxist-Leninist party.

Its ideological legitimacy depends not on national or global class struggle but on its ability to continue to support rising living standards as well as continuing to restore China’s international stature in the eyes of the world, as it once enjoyed in the past.

For the Party, therefore, both the economy and nationalism matter.

If these were seen to be significantly impinged or impaired by future developments, it would impact on the Party’s perceived legitimacy.

It is difficult to predict how much further the new leadership would be prepared to go on these questions – that is China’s long-term democratisation.

Historically it has always been safe to assume that China, under the Communist Party will not democratise.

The Party’s emphasis to date has been to improve what is called “internal party democracy”.

And with a mass political membership of more than 80 million, this is no mean feat in itself, particularly given the traumatic leadership transitions which occurred virtually every decade in China’s modern political history until we reached the 1990s.

My own instinct is that the new leadership will use its first term to both entrench and deepen China’s domestic economic reform agenda.

This is a gargantuan task in itself.

And that any formal steps towards more political reform are more likely to be deferred to Xi Jinping’s second term – assuming the economic reform program is properly implemented and the Chinese economy itself continues to perform.

The second priority of the new leadership, consistent with its predecessors will be to maintain the national political unity of the People’s Republic.

Any form of separatism remains inconceivable within domestic Chinese politics – be in Tibet, Xinjiang or Taiwan.

In Chinese political history, the heroes are those who unite the Chinese empire. The villains are those who allow it to fall apart, or else make it vulnerable to foreign invasion.

Repressing separatist movements in these three regions have long been defined as China’s core interests – “hexin liyi”.

More problematic has been more recent Chinese claims that various off-shore islands in the South China Sea and elsewhere (including their surrounding territorial seas) are also part of China’s core interests.

This claim is hotly contested by a range of regional powers and is the source of considerable regional instability at present.

Nonetheless, China’s military posture is in large part shaped by these “core interest” considerations concerning “the unity of the Motherland”.

China has had little, if any, history of significant external invasion of either neighbouring countries or beyond – including when the Chinese Empire was the undisputed superpower of Asia.

Nonetheless, China in recent times has exhibited an increasing interest in defending its own international sea lines of communication covering its energy supply routes across the Indian Ocean to The Gulf.

As well as extending the range of consular services that China is now required to provide to millions of Chinese nationals now living and working abroad, often in some of the most dangerous parts of the world, including most recently Libya.
Third, where I believe the new leadership is likely to most significantly depart from the previous leadership over the last decade is in the pace, intensity and direction of China’s domestic economic reform program.

It is true that the twelfth five year plan delivered at the end of 2010 by China’s outgoing leadership represents a fundamental conceptual break with the past – substituting its old growth model of low wage, labour intensive manufacturing for export, to a new growth model based increasingly on rising domestic consumption, lower savings and investment and the rapid expansion of Chinese services industries.

But while China’s transformation to a new growth model has been officially proclaimed, it has not yet been effectively implemented.

I believe the new Chinese leadership may well embrace the following policy directions.

We are likely to see further market reforms of the Chinese economy.

I believe we’ll see reforms to China’s state-owned enterprises and the possible privatisation of some.

I believe we’ll see reforms to the Chinese financial services industry and a greater ability for Chinese private enterprises to have easier and more competitive access to finance, sustain and expand their operations.

I believe we’ll also see further reforms to Chinese currency markets which over time is likely to make Chinese imports more competitive in their domestic market.

This brings us to a fourth enduring Chinese strategic interest which is building and maintaining a benign foreign and security policy environment within China’s immediate region.

This has strong resonances in Chinese history and it relates to what Henry Kissinger in his most recent tone “On China” refers to as “Chinese exceptionalism”.

In contemporary China, it reflects the Chinese leadership’s view that this sort of strategic stability is necessary to underpin China’s core policy project for the decade ahead which is to conclude its economic modernisation task.
This has meant that China over the last 15 years in particular has demonstrated an active and agile diplomacy in building strong relationships across Asia. It has also meant that the PLA continues to expand rapidly in order to contest US strategic hegemony in the waters of the South China Sea, East China Sea and the Sea of Japan.

These expanded capabilities are also deemed to be necessary against any future contingencies concerning Taiwanese independence and the deployment of military capabilities necessary to prevent that from occurring – including strategic denial of any US forces committed to the defence of Taiwan.

These defined strategic interests have been reflected again over the last decade and a half, in the rapid increase in Chinese military budget allocations and in the evolution in Chinese force structure and military doctrine.

The current strategic direction, doctrine and structure of the PLA was laid out by Hu Jintao in a formal statement to the CMC published in 2004.

Hu Jintao described these as the PLA’s “new historic mission”:

·         First to guarantee the ruling position of the Chinese Communist Party;
·         Second, to safeguard China’s national development;
·         Third, to protect China’s national interests (the latter invariably further defined as maintaining the unity of the motherland in relation to Xinjiang, Tibet and Taiwan; but more controversially the recent addition of the South China Sea to this longstanding list of “core interests”); and
·         Fourth, and most opaquely, “the preservation of world peace”.

It is the third and the fourth of these functions that captures the interests and sometimes the concern of the international community.

Finally, China has a deep national interest in securing its long-term sources of energy and resource supply.

This is deemed critical to China’s economic modernisation task.

China will continue to seek to maximise domestic energy and resource self-sufficiency in order to deal with its acute sense of vulnerability to interruptions to its sea lines of communication.

Energy and resource security remain an enduring priority on the Politburo table.

Just as the new shale gas revolution is transforming the current landscape of the US economy so too is there a massive exploratory effort currently underway across China’s known shale gas deposits in order to reduce vulnerability to external supply from the Gulf and elsewhere as well as reducing carbon emissions for China’s own environmental purposes.

This is also why we’ve seen such concerted Chinese effort in building its gas pipeline network from Central Asia and the Russian Federation.

Nonetheless for the foreseeable future, China sees itself as having significant continuing interest in being able to defend its sea lines of communication across the Indian Ocean and in the broader region of the Persian Gulf.

This has particular implications for China’s interests in the Gulf and Indian Oceans.

This also of course has a deep bearing on the strategic doctrine and force structure of the PLA Navy as it seeks to develop a wider range of blue water capabilities.

Regional and Global Implications

I believe a clear sighted analysis of China’s enduring strategic interests provides a fundamental framework for understanding China’s evolving political, economic and military capabilities and intentions.

The beginning of wisdom for the collective West is to understand that China does have entirely legitimate strategic and national interests.  

We may disagree with the structure of the Chinese political system but that does not mean that China’s enduring national interests are therefore somehow invalid.

The truth is China wants its own place in the world.

It wants to be respected as one of the world’s great powers.

It wants to overcome its century of foreign humiliation culminating in the Japanese occupation and return the Middle Kingdom to what it sees as its rightful place as both a high civilisation as well as a great power.

Equally that does not mean that if China’s interests and values are in conflict with our own, that they should not go uncontested.

In my own experience, our Chinese friends are great respecters of strength.

Just as they are equally contemptuous of weakness and vacillation.

So how therefore should we engage China in the period ahead?

The Obama Administration has laid down some fundamental pillars in its future engagement both with China in particular, and the Asian hemisphere in general.

At the military level the administration has executed its “rebalance” to Asia, underlined in black and white, and in the numbers of nuts and bolts on US naval vessels, for America’s long-term strategic engagement in Asia and the Pacific.

Diplomatically, the administration under the leadership of US Secretary of State Hillary Clinton has been more active in the region than most of its predecessors; and has further entrenched its regional engagement in Asia by becoming a full member of the East Asia Summit.

Economically, the administration has backed the enhancement of the Trans-Pacific Partnership to include other major economies in the region (including Japan) as well as prospectively leaving the door ajar for China as well.

Despite the inevitable diplomatic frictions arising from each of these measures, the overall strategic settings for US continued engagement in Asia have been put in place.

They have also been responded to positively by most (albeit not all) countries in the region.

So how should the next US administration (Obama or Romney) now deal with the purported challenge of working with the new Chinese administration of Xi Jinping for the future?

In summary, I would make the following five foreign policy recommendations:

·         First, whoever wins the US Presidential election must, as a matter of priority, develop a Strategic Roadmap for US-China relations for the next five years. This should deal with the regularity of summitry, the content of summitry, a forward looking agenda for strategic cooperation both globally and regionally in areas where that can be achieved. Furthermore it is critical that this be done now while global economic transition is in prospect rather than in retrospect;
·         Second, we should continue to engage China on its global contributions to upholding global peace and security including in formal peacekeeping operations, counter-terrorism and counter-piracy, continuing to reinforce with our Chinese friends that they themselves have a significant and continuing national interest in sustaining and enhancing the current global rules-based security order;

·         Third, within the Asian hemisphere, we should work with Beijing on the long term project of turning the East Asia Summit into something approaching an Asia-Pacific community. We now have the desirable membership for such a community with the ten South-East Asians; the three North-East Asians; India, Australia and New Zealand and now, lastly, the United States. And given this institution has an open economic, political and security mandate, our challenge now is to make it work rather than languish as a paper exercise;
·         Fourth, under the auspices of the East Asia Summit, the ASEAN Defence Ministers+8 (which has an identical membership to that of the EAS) should be commissioned to develop and implement a full raft of confidence and security building measures among all 18 member states. This should involve military to military hotlines, regular mil-mil meetings across all 18; as well as combined military exercises in non-controversial areas such as common disaster management; protocols for managing incidents at sea; and, over time, the freezing of territorial claims; and a commitment to the joint extraction of resources; as well as the wider application of the principles of the peaceful resolution of disputes of the type already outlined in ASEAN’s Treaty of Amity and Cooperation. At present in Asia we virtually have none of these CBSMs so that when incidents do occur, it happens in a tinder box with a strong predilection for the magnification of disputes rather than managing those disputes down. In Asia, surely we have the wit and wisdom not to repeat the carnage of Europe across centuries and instead construct a new Pax-Pacifica based on the principles of common security - which is neither a simple Pax-Americana nor a Pax-Sinica;


What I’ve sought to do this evening is to argue why we need to improve both our analysis and most critically our synthesis of what modern China means for the rest of the region and the rest of the world.

I’ve also sought to identify what I believe to be core and enduring Chinese strategic interests which underpin evolving analyses of Chinese capabilities and intentions into the future.
And I’ve also sought to outline how I believe the US should strategically approach China with all the opportunities and challenges that new administrations in Beijing and Washington may present.
I have not engaged in the detailed debates about military doctrine and force structure.
That is where this volume brings a significant albeit contested contribution to this debate. Rather I have sought to place these considerations within the wider canvas within which political leaders, foreign ministers and diplomats must operate in the decade ahead as we all embrace the opportunities and challenges presented by the rise of China.
On balance I remain an optimist that we can negotiate a Pax-Pacifica.
But it’s going to require dedicated statesmanship on the part of us all.
It is therefore what great pleasure that I launch this book “Competitive Strategies for the 21st Century edited by Thomas ahnken and with a contributing chapter by our very own Ross Babbage.


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