Treating China as an enemy

By Ambrose Evans-Pritchard

Last updated: February 24th, 2012

China's first aircraft carrier on a sea trial in 2011 (Photo: Digitalglobe)

I have just been sent a copy of Amitai Etzioni's essay "China: Making an Adversary" published in International Politics. It has been out for a while but is new to me and will not have been seen by most Telegraph readers.

As you all know, Washington (and the West) is deeply split over how to handle China's spectacular renaissance. This is by far the most important issue in 21st-century geopolitics. It is not one we can afford to get wrong, and errors made today may prove irreversible.

The new term "China hedge" has been coined, used by those who think that the country's growing economic and military might – combined with a new "truculent attitude" – is potentially so menacing that the US must rearm and reorganise its global alliance structure as an insurance policy.
These "containment" hawks cite the following reasons:

China's defence budget grew at 12.9pc a year from 1996 to 2008, while GDP grew at 9.6pc. A State Department task force report concluded that "it is proceeding at a rate to be of concern even with the most benign interpretation of China's motivation".

The US military has been in rapid decline. The US navy has been cut from 780 ships in 1989 to 280 ships today, the smallest fleet since 1916. The US military faces a "train wreck" (Hadley and Perry, 2010). 
China is developing "asymmetric" capabilities, specifically targeted at countering the US. They cite the A2/AD area denial systems, such as anti-ship ballistic missiles designed to deny the US access to allies in the Pacific theatre. This could force US aircraft carrier battle groups to retreat deep into mid-ocean, leaving the US impotent in a crisis or forced to engage in dangerous escalation of mainland bombing. 

China has been throwing its weight around the South China Sea, declaring much of it an Exclusive Economic Zone and harassing fishing boats to make their point. "Once it becomes clear, a few years or a decade hence, that the US cannot credibly defend Taiwan, China will be able to direct its naval energies beyond the first island chain in the Pacific to the second island chain (Guam) and in the opposite direction to the Indian Ocean," wrote Robert Kaplan. (Personally, I think such arguments fail to understand the neuralgic significance of Taiwan in the Chinese psyche, especially since the Kuomintang set up their "white" base there. To see the island as a forward post for expansion is a leap of imagination.)

Some would add that China's sudden restriction of rare earth metal exports used in hi-tech industry shows the country's true colours and unwillingness to abide by basic trading rules (though I would put this episode down to cock-up rather that conspiracy).
Against this, the "engagers" say such claims are all inflated, or fundamentally wrong:

The US Defence Dept overstates the Chinese military budget at $150bn. The Military Expenditure Database of the Stockholm Peace Institute puts it at $100bn. China's defence spending as a share of GDP has been constant, growing at 8pc in line with the economy.

China's nuclear submarines are a flop, supposedly so noisy they are "sitting ducks". Its nuclear armed bomber fleet is obsolete. Its new stealth fighter won't be operational for years. It has 186 nuclear warheads compared to 1550 deployed in the US.

China is largely isolated in military terms. The US has allies of varying kinds in Japan, South Korea, Singapore, Malaysia, The Philippines, Indonesia, Thailand, India, and even now Vietnam.

The country has made a big push to boost co-operative ties with neighbours through ASEAN. It has already settled 17 of its 23 territorial disputes in the region, largely on moderate terms.

The prevailing view in the Chinese Communist Party is that the Soviet Union bankrupted itself with a ruinous arms race against the US.

China has not used its estimated $2 trillion holdings of US debt as a lever of power (though it cannot do so without forcing up the yuan, since the reserves are the flip side of its mercantilist currency policy).

I might add that China has the most rapidly ageing society in the world. The one-child policy has created a nation of single sons, and families will not sacrifice them lightly for military adventures. Thrusting powers almost invariably emerge from a recent past of big families.

The country has no modern history of territorial aggrandisement (leaving aside the complex story of Tibet under Chinese suzerainty for eight hundred years until China fell apart in the 19th Century, and the Brits later became entangled during the Great Game).

Professor Etzioni's view is that the US and the West have plenty of time to pursue the "Beijing hedge": to work from the assumption that the rise of China is largely benign and make all efforts to draw China into the global system as a full stakeholder. Only if that fails should the West then go back to the drawing board.

By treating China as an enemy, the hawks risk bringing it about. Such a policy reinforces the hardliners in the Chinese power struggle. It is self-fulfilling.

I have in the past invoked the mishandling of Wilhelmine Germany before World War One as warning of what can go wrong if the status quo powers (then Britain) play their hand badly. The containment policy fed the Kaiser's encirclement paranoia.

There are certainly superficial parallelsChina's steel and industrial output have been exploding at the same rate as in Germany from 1880 to 1910 – but the more I think about it, the less useful it is. Germany was fast matching the UK in technology and per capita income, and was starting to challenge the Royal Navy in absolute terms.

But the comparison is unfair to China, anyway. The Kaiser intended to upset the European order. His general staff had drawn the Schlieffen Plan to attack France and Russia in minute detail – and did in fact activate the plan once Sarajevo provided the pretext ("the gift from Mars" as famously revealed in the general staff archives).

China remains poor, with a per capita income of just $7,000. It faces the classic "middle income trap" in a few years time when the low-hanging fruit of catch-up growth is exhausted. The country will soon have to make the switch from copying technology to cutting-edge invention, the challenge that has defeated so many economies over the years and made a mockery of so many extrapolation curves.

As the World Bank warns in its latest report (out Monday), China risks coming down to earth with a thud unless it breaks the state stranglehold on investment.

My own guess is that China will go through a nasty little hangover as it purges toxins from the great credit boom of the last five years, before settling down to more pedestrian growth rates. It will be a big economic power, but not so vast it upturns the whole global system. It risks becoming old before it is rich.

So I am broadly in the Etzioni camp, as are Barack Obama and David Cameron by and large. Those pushing for hardline containment are frankly dangerous, nourishing a paranoid streak in Chinese culture that is for now largely dormant.

Let us stick to appeasement, in the old-fashioned sense.

A World Bank for a New World

Jeffrey D. Sachs


NEW YORK – The world is at a crossroads. Either the global community will join together to fight poverty, resource depletion, and climate change, or it will face a generation of resource wars, political instability, and environmental ruin.

The World Bank, if properly led, can play a key role in averting these threats and the risks that they imply. The global stakes are thus very high this spring as the Bank’s 187 member countries choose a new president to succeed Robert Zoellick, whose term ends in July.

The World Bank was established in 1944 to promote economic development, and virtually every country is now a member. Its central mission is to reduce global poverty and ensure that global development is environmentally sound and socially inclusive. Achieving these goals would not only improve the lives of billions of people, but would also forestall violent conflicts that are stoked by poverty, famine, and struggles over scarce resources.

American officials have traditionally viewed the World Bank as an extension of United States foreign policy and commercial interests. With the Bank just two blocks away from the White House on Pennsylvania Avenue, it has been all too easy for the US to dominate the institution. Now many members, including Brazil, China, India, and several African countries, are raising their voices in support of more collegial leadership and an improved strategy that works for all.

From the Bank’s establishment until today, the unwritten rule has been that the US government simply designates each new president: all 11 have been Americans, and not a single one has been an expert in economic development, the Bank’s core responsibility, or had a career in fighting poverty or promoting environmental sustainability. Instead, the US has selected Wall Street bankers and politicians, presumably to ensure that the Bank’s policies are suitably friendly to US commercial and political interests.

Yet the policy is backfiring on the US and badly hurting the world. Because of a long-standing lack of strategic expertise at the top, the Bank has lacked a clear direction. Many projects have catered to US corporate interests rather than to sustainable development. The Bank has cut a lot of ribbons on development projects, but has solved far too few global problems.

For too long, the Bank’s leadership has imposed US concepts that are often utterly inappropriate for the poorest countries and their poorest people. For example, the Bank completely fumbled the exploding pandemics of AIDS, tuberculosis, and malaria during the 1990’s, failing to get help to where it was needed to curb these outbreaks and save millions of lives.

Even worse, the Bank advocated user fees and “cost recovery” for health services, thereby putting life-saving health care beyond the reach of the poorest of the poorprecisely those most in need of it. In 2000, at the Durban AIDS Summit, I recommended a newGlobal Fund” to fight these diseases, precisely on the grounds that the World Bank was not doing its job. The Global Fund to Fight AIDS, TB, and Malaria emerged, and has since saved millions of lives, with malaria deaths in Africa alone falling by at least 30%.

The Bank similarly missed crucial opportunities to support smallholder subsistence farmers and to promote integrated rural development more generally in impoverished rural communities in Africa, Asia, and Latin America. For around 20 years, roughly from 1985 to 2005, the Bank resisted the well-proven use of targeted support for small landholders to enable impoverished subsistence farmers to improve yields and break out of poverty. More recently, the Bank has increased its support for smallholders, but there is still far more that it can and should do.

The Bank’s staff is highly professional, and would accomplish much more if freed from the dominance of narrow US interests and viewpoints. The Bank has the potential to be a catalyst of progress in key areas that will shape the world’s future. Its priorities should include agricultural productivity; mobilization of information technologies for sustainable development; deployment of low-carbon energy systems; and quality education for all, with greater reliance on new forms of communication to reach hundreds of millions of under-served students.

The Bank’s activities currently touch on all of these areas, but it fails to lead effectively on any of them. Despite the excellence of its staff, the Bank has not been strategic or agile enough to be an effective agent of change. Getting the Bank’s role right will be hard work, requiring expertise at the top.

Most importantly, the Bank’s new president should have first-hand professional experience regarding the range of pressing development challenges. The world should not accept the status quo. A World Bank leader who once again comes from Wall Street or from US politics would be a heavy blow for a planet in need of creative solutions to complex development challenges. The Bank needs an accomplished professional who is ready to tackle the great challenges of sustainable development from day one.

.Jeffrey D. Sachs is Professor of Economics and Director of the Earth Institute at Columbia University. He is also Special Adviser to United Nations Secretary-General on the Millennium Development Goals.