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Cablegate: Prospects for U.S.-China Relations

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TO RUEHC/SECSTATE WASHDC IMMEDIATE 5296
INFO RUEHOO/CHINA POSTS COLLECTIVE
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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

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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

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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

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