trade, interdependence, and security

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1 strategic asia trade, interdependence, and security Edited by Ashley J. Tellis and Michael Wills Country Studies Rising China: The Search for Power and Plenty Michael R. Chambers restrictions on use: This PDF is provided for the use of authorized recipients only. For specific terms of use, please contact To purchase the print volume in which this chapter appears please visit < or contact 1414 NE 42nd Street, Suite 300 Seattle, Washington USA the national bureau of asian research

2 executive summary This chapter analyzes the growth of China s trade and economic interdependence with both its Asian neighbors and the United States and assesses the impact these developments will have on China s security and the security of the Asia-Pacific region. main argument: China currently is engaged in a process of strategic economic development that will enhance the People s Republic of China s (PRC) comprehensive national power. The purpose of this development is to enhance national wealth, creating a reasonably prosperous China by 2020 and providing the economic basis for China s emergence as a regional and global great power. Toward these ends, China has sought to develop webs of economic interdependence with its regional neighbors. These connections are both supporting the PRC s economic development and linking these neighbors to China in friendly and cooperative relations. China is also exhibiting restraint and greater cooperation with its neighbors behavior explained by economic interdependence as well as Beijing s own foreign policy strategy. policy implications: The webs of interdependence, coupled with Beijing s desire for regional peace and stability, likely will constrain militaristic adventurism by the Chinese around their periphery over the next five to ten years. Given the growth of economic interdependence between China and its Asia-Pacific neighbors, several of these countries would be reluctant to jeopardize the benefits of trade with the PRC in the event of Sino- U.S. conflict over Taiwan. This reluctance will complicate U.S. military operations in the event of such conflict. The U.S. and the international community should continue to encourage China s active participation in the global economy and multilateral international institutions. Once China s rise to great power status is achieved, China s interests may change from basic acceptance of the international status quo to more revisionist goals. Engagement and socialization today are the best hedge against a future revisionist China.

3 China Rising China: The Search for Power and Plenty Michael R. Chambers This chapter seeks to outline the current and future impact of China s growing trade and economic interdependence on the security both of China and of the Asia-Pacific region. The chapter will seek to answer two basic questions. First, how do growing trade and interdependence relate to and impact China s grand strategy as it is rising to great power status? Second, will China s increasing involvement with and integration into global trade help to constrain China from military adventurism? The People s Republic of China (PRC) is currently engaged in strategic economic growth with the goal of becoming a moderately well-off society by the year 2020 and providing the economic basis for China s drive to become a great power. Beijing sees not a mutually exclusive choice between wealth and power but a close interrelationship between economic development and security, with each dependent on the other. The key themes and arguments of this chapter are threefold: First, China s goal to become a great power is based on the development of comprehensive national power that is rooted in a strong and prosperous economy. Beijing is using foreign trade and investment as key drivers for the development of its economy. Second, China seeks to develop webs of interdependence with its regional neighbors in order to link them to the PRC as well as to create a buffer zone to help Beijing resist any hostile pressure from the United States. China s efforts to build interdependence also are intended to dampen Asian Michael R. Chambers, Associate Professor of Political Science at Indiana State Univesity, is an editor of Asian Security. He can be reached at <mchambers3@indstate.edu>. The author wishes to thank Brandy Jolliff, Shyam Kulkarni, Peter Mattis, and Evan Morrisey for research assistance.

4 66 Strategic Asia anxieties about the China threat as the PRC rises. These efforts appear to be generally successful. Finally, economic interdependence appears to be constraining China in cooperative relations with its neighbors. Also at work, however, is Chinese self-restraint based on Beijing s strategic desire for a peaceful and stable regional security environment in which to pursue economic development. Based on the analysis presented below, three main policy implications both for the United States and for the international community become evident. First, the webs of interdependence, coupled with Beijing s desire for regional peace and stability, will likely constrain militaristic adventurism by the Chinese around their periphery over the next five to ten years. Second, given the growth of economic interdependence between China and its Asia-Pacific neighbors, several of these countries would be reluctant to jeopardize the benefits of trade with the PRC in the event of Sino-U.S. conflict over Taiwan. This reluctance will complicate U.S. military operations in the event of such conflict. Finally, the United States and the international community should continue to encourage China s active participation in the global economy and multilateral international institutions. Once China s rise to great power status is achieved, the PRC s interests may change from basic acceptance of the international status quo to more revisionist goals. Engagement and socialization today are the best hedge against a future revisionist China. The chapter is organized as follows. The first section reviews the grand strategy guiding China s rise and examines the importance of international trade and foreign investment for China s economic development. The section that follows examines the extent of economic interdependence in China s relations with its Asian neighbors and major trade partners. A third section considers security implications of this interdependence, and a conclusion offers policy implications. Grand Strategy, Trade, and Economic Interdependence Ever since Chairman Mao Zedong s announcement on October 1, 1949 that the Chinese people had finally stood up, the Chinese leadership has sought to return China to its position of traditional international and regional status. During the Maoist era ( ), China made some progress toward this goal (e.g., the development of nuclear weapons). Nevertheless, many of the radical political and economic policies of Mao thwarted Beijing s efforts. Not until the late 1970s, with the rise of pragmatic reformers under the leadership of Deng Xiaoping, did the PRC finally set the country on the path to sustained economic modernization and development. Averaging

5 Chambers China 67 9% annual economic growth since the reforms of 1978, China has set the stage for its rise to great power status. Deng and the pragmatic reformers understood that economic modernization and development would need to be the basis for growth of China s comprehensive national power and that the PRC would need to open up to the international economy including international trade and foreign investment in order to help spur continued economic development. Grand Strategy with Chinese Characteristics China s long-term strategic goal to become a great power in the Asia- Pacific region and beyond is guiding China s overall foreign policy. 1 To achieve this goal, the PRC needs to develop its comprehensive national power or overall national strength, which includes economic, political, and military components. This is a long-term plan that will require a few decades to achieve, based as it is on the modernization and development of China s economy. Beijing is also adopting a gradual approach so as not to unduly antagonize other great powers, especially the United States; the Chinese recognize the current international structure of U.S. unipolarity and do not want to provoke counterbalancing actions to China s, rise either by the United States or by any Asian neighbors. 2 Emphasizing China s goal of rising to great power status is not to deny the importance of the more basic priorities of maintaining regime security and preserving the territorial integrity of the PRC. These remain critical for the Chinese Communist Party (CCP) leadership, and Beijing perceives that the longer-term goal of great powerdom cannot be achieved without 1 There is some debate among analysts of Chinese foreign relations as to the existence of a Chinese grand strategy. Thomas Christensen has argued that China lacks a unified grand strategic plan to bind together the PRC s economic, security, and foreign policy objectives, while Avery Goldstein, Michael Swaine, and Ashley Tellis admit the lack of an explicit strategy but see a de facto grand strategy both accepted by the Chinese leadership and guiding their policies. There is also some debate over the relative weighting of the Communist Party leadership s emphasis on maintaining regime security, domestic stability, and national unity versus the CCP s drive for influence and great power status at the regional and global levels. See Thomas J. Christensen, China, in Strategic Asia : Power and Purpose, ed. Richard J. Ellings and Aaron L. Friedberg (Seattle: National Bureau of Asian Research, 2001), 27 69; Avery Goldstein, Rising to the Challenge: China s Grand Strategy and International Security (Stanford: Stanford University Press, 2005); and Michael D. Swaine and Ashley J. Tellis, Interpreting China s Grand Strategy: Past, Present, and Future (Santa Monica: Project Air Force and RAND, 2000). 2 For a discussion of this Chinese wariness, see Goldstein, Rising to the Challenge, especially pages , and chapter 7; and Wang Jisi, China s Changing Role in Asia (occasional paper of the Atlantic Council of the U.S., January 2004).