Can Xi and Biden Work It Out?

Andy Rothman, Matthews Asia Investment Strategist, and Dr. Paul Heer, a former U.S. National Intelligence Officer for East Asia, discuss the implications of the Ukraine conflict for China’s ties with the U.S. The comments are based on a webcast discussion from 16 March 2022.

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Andy Rothman: How does China currently view its role in Asia and on the world stage?  

Dr. Paul Heer: China is engaged in an effort to maximize its wealth, power, influence and security, particularly relative to the U.S. It is pursuing what it sees as the restoration of its preeminence in East Asia. That doesn’t mean China wants to annex and eliminate the sovereignty of its neighbors—it just sees its natural place historically as the regional hegemon. China also aspires to be a great power globally, but not necessarily the global hegemon. While it perceives itself as engaged in a strategic competition with the U.S., I don't think it is approaching this as a zero-sum or winner-takes-all game.

Is China trying to export its way of doing things overseas?

China has been exporting some of its organizational and structural tools of authoritarianism, partly for money-making reasons. But China likes to advertise what it sees as the effectiveness of its system, so it’s also engaged in programs to instruct other interested countries on its governing model and model of development. Where I draw the line is that I don't think the Chinese are trying to impose this on other countries. I think the Chinese are trying to legitimize their system of governance, both domestically and internationally.

How much sway do you think Xi Jinping has over Vladimir Putin and Russia’s invasion of Ukraine?

Xi clearly has some leverage over Putin because of their strategic relationship, their personal relationship and the two countries’ economic relationship. But I suspect this may be comparable to long-standing presumptions about China’s relationship with North Korea. Yes, China has more influence than other outside powers but not as much as we might think. The bigger question is what incentives Xi thinks he has to put leverage on Putin over the war? This is a very complex equation. I think Xi, and in fact the collective leadership in Beijing, will be engaged in some very intense cost-benefit analysis of the current situation.

What will be China’s next move regarding the war?

I think the Chinese are genuinely concerned about what's happening in Ukraine. China could boost its international reputation by doing the right thing and condemning Putin's action. That would also serve the purpose of validating its commitment to the principles of non-interference and territorial sovereignty. But the Chinese generally agree with Putin that U.S. and NATO disregard for Russian security interests contributed to the crisis. I think if China was to distance itself from Moscow it would be exonerating what it sees as Washington's share of the blame for the conflict. More importantly, the Chinese don’t see any material benefit from aligning themselves with what would be a U.S.-led anti-Russian coalition. The Chinese don’t believe that if they distance themselves from Putin, it's going to erase all of the sources and drivers of mutual U.S.-China suspicion.

How do you think China’s posture toward Western sanctions on Russia will change?

I think China is still grappling with this. I don't anticipate that Xi is going to direct China’s central bank or major Chinese companies to explicitly violate the sanctions. Beijing recognizes that there are liabilities there that it doesn't want to incur, such as secondary sanctions. Whatever it does along these lines is likely going to be incremental and done as subtly and quietly as possible. I think China is very hopeful that a negotiated settlement is going to happen soon enough that allows it to avoid these kinds of hard choices.

How can the U.S. and China dynamic change for the better?

The conflict in Ukraine may be a window for the U.S. to approach China and make clear the benefits it could derive internationally from distancing itself from what Putin is doing. But I think that is going to be very difficult. China doesn’t react positively when the approach is, “we want to sit down and tell you what's in your best interests and you need to understand our assessment of your best interests and follow our advice.” Secondly, the strategic distrust is so deep and so broad between the U.S. and China that Beijing doesn’t see a lot of positive incentives to being accommodative to the U.S. right now.

Do you see U.S. foreign policy toward China as an effort to contain China?

That question is akin to another:  Is the U.S. engaged in a new cold war with China? And the answer to both really depends on how you want to define those terms. Through its prism, China sees it that way. One of the central elements of the Biden administration's China policy is a mobilization of allies in a contest against Chinese autocracy and its version of international rules. Historically, NATO and the Marshall Plan were the primary vehicles for containing the Soviet Union and the Chinese see similar U.S. policies unfolding in Asia today.

What kind of incentives do you think Beijing is looking for to work with the U.S.?

I’m not sure that China is thinking in a transactional way. Obviously, China would love to see the U.S. make concessions with regard to Taiwan or trade relations and to ease up on pressuring China over human rights issues. In this arena, China prefers to set up the structure of a relationship before it gets into the specifics. I would frame it not so much as China wanting specific deliverables but rather wanting to get back to a relationship that has cooperation and reciprocity in it.

Why has the security environment across the Taiwan Strait become more tense?

The prevailing view in the West is that China has become overconfident and is now eager to accelerate the process of unification, and/or that Xi appears to have established this as one of his personal goals. But this overlooks actions by Taipei and Washington to which Beijing has been reacting. From China’s perspective, Taiwan’s president Tsai Ing-wen has withdrawn from the “one China” framework, and Washington has essentially endorsed this.  The bottom line is that Beijing sees that the U.S. has promised to have a one-China policy, with an explicit promise to not have a “one-China, one-Taiwan” policy. But Beijing now thinks the U.S. is pretty close to having established a de facto “one-China, one-Taiwan” policy.

Will Xi use force against Taiwan?

I don’t think so. Beijing would like to resolve the issue peacefully. That being said, I think some have mistakenly interpreted the historical record as reflecting a Chinese promise that it would not use force. I don’t believe China is looking for an opportunity to attack Taiwan; it’s still looking for reasons not to. But it’s increasingly seeing that the other ways of resolving the matter are being taken off the table. So the risk of conflict is growing. Right now, I don’t think there's any basis to believe that China has already reached a conclusion that conflict is unavoidable.

Won’t the Ukraine war dissuade China from a conflict with Taiwan?

If Putin acted in Ukraine because he felt he “had to” after repeated U.S. inattention to, or disregard of, Russian security concerns as he perceived them, the West should be concerned that China might at some point reach a similar conclusion about the need to resolve Taiwan militarily. China sees the U.S. as being inattentive to the importance China attaches to Taiwan, and to Washington’s own “one China” commitments. Countering this, I think China recognizes the differences between Ukraine and Taiwan. Even though the Taiwan Relations Act doesn’t constitute a U.S. defense commitment to Taiwan, I think China has long believed that the U.S. would intervene in a cross-strait conflict.

Is Xi’s third term going to be his last?

Probably not. I think the only two things that could prevent a fourth term would be his death or his somehow being kicked out by his rivals. I think Xi is there for as long as he wants to be. It's very much an open-ended debate about what kind of domestic opposition there is to his leadership. Chinese politics can move pretty slowly over time but I wouldn't rule out the possibility that within the next five years there could be some unforeseen domestic crisis that provokes a leadership change.

Also, I would say that while Xi has consolidated more power and authority than anyone since Deng or perhaps even Mao, most of the strategic drivers of Chinese foreign policy today are not exclusively the product of Xi's leadership. A lot of these historical developments predated his tenure. His personality and ambition have made a difference but I think that there's a consensus in the Chinese leadership on how to assess and respond to the international environment, and has been for decades.


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